MOORLACH UPDATE — PSPS and Cities 241 to 288 — November 19, 2019

PG&E

I have the privilege of serving as the Vice Chair of the Senate Energy, Utilities and Communications Committee this year.  And what a year it has been. With the recent Public Safety Power Shutoff resulting from the Santa Ana and Diablo winds, a special hearing was called for November 18th and every State Senator was invited to attend this committee’s discussion on Public Safety Power Shutoffs. However, most of the Senators in Sacramento yesterday were members of the committee.

I presented opening remarks, which I will provide in a future UPDATE. For a sense of what I shared, see MOORLACH UPDATE — Measuring Insincerity and Cities 97 to 144 — November 13, 2019.

The three major investor-owned utilities (IOUs) were represented by key executives, but only PG&E’s new CEO, William Johnson, was present and testified.  To see the agenda, go to https://seuc.senate.ca.gov/content/#November182019.

PG&E was pummeled during the day by Senators and various speakers.  Therefore, I appreciated Mr. Johnson attending the entire hearing. There is a need to reduce utility-caused wildfires, and it is apparent that PG&E was not proactive in its approach,  especially when compared to SDG&E and SCE. The state of California is also guilty of a late reaction. The hearing certainly emphasized that there is much more to do.

On the issue of a state takeover of  PG&E, I asked Mr. Johnson his concerns about being “nationalized.”  He was fully aware that it was an option.

I asked each of the utilities what they were doing to install newer and more advanced electric lines and power diverters or current limiters, a newer technology that is being implemented in Australia to react to the surge of current that is unleashed when a high voltage line strikes the ground or is struck by a falling tree or tree branch.

Mr. Johnson said that, over the last 10 years, PG&E had spent $30 billion, but he did not mention newer technology.  So, I asked him where PG&E spent this large amount of money.

Some highlights are provided below in Dan Morain’s daily email blast for CalMatters.

Cities 241 to 288

We’re now in the 50th percentile of cities. These cities have  below-average balance sheets. In this sixth group, there is only one Orange County city, Seal Beach (#245).  This means 15 Orange County Cities are in the 60th percentile or lower.

Riverbank, Arroyo Grande and California City have not completed their annual audits for June 30, 2018.  They are almost a year behind in what should be the anticipated completion date. This is a signal to Sacramento, cities are having difficulty meeting their reporting requirements.  Consequently, I have projected their Unrestricted Net Deficits based on conservative assumptions.

The city of Porterville (#262) dropped 96 places.  It did something highly unusual, it increased its restricted net assets by $25.5 million.  Its pension liability rose by $6 million and the other post-employment benefit liability rose by $4.4 million.  This would explain why its unrestricted net position went from a positive net assets of $13.7 million to a net deficit of $20.3 million, or a $34 million decrease in one year.

Rank City Pop. UNP 2018 (Thou-sands) UNP/ Capita 2017 Rank Rank Change
241 Angels Camp 4,121 ($686) ($166) 241 0
242 Dixon 19,896 ($3,373) ($170) 282 40
243 San Ramon 82,643 ($15,099) ($183) 261 18
244 Riverbank 25,244 ($4,675) ($185) 205 -39
245 Seal Beach 25,984 ($4,911) ($189) 201 -44
246 Livingston 14,328 ($2,738) ($191) 219 -27
247 Hanford 58,176 ($11,446) ($197) 247 0
248 Patterson 22,679 ($4,612) ($203) 475 227
249 Arroyo Grande 17,912 ($3,702) ($207) 264 15
250 Norwalk 107,546 ($22,929) ($213) 236 -14
251 Oceanside 177,362 ($37,821) ($213) 290 39
252 Lake Elsinore 63,365 ($13,554) ($214) 272 20
253 Lomita 20,715 ($4,507) ($218) 242 -11
254 Galt 26,018 ($5,834) ($224) 270 16
255 Los Banos 40,986 ($10,084) ($246) 229 -26
256 San Mateo 104,490 ($27,695) ($265) 266 10
257 Guadalupe 7,604 ($2,067) ($272) 306 49
258 Anderson 10,263 ($2,808) ($274) 276 18
259 Mount Shasta 3,385 ($981) ($290) 265 6
260 Oakdale 23,324 ($6,909) ($296) 299 39
261 Alturas 2,868 ($914) ($319) 312 51
262 Porterville 60,798 ($20,249) ($333) 166 -96
263 Oroville 18,144 ($6,108) ($337) 304 41
264 Livermore 91,411 ($31,159) ($341) 280 16
265 Yuba City 67,280 ($23,187) ($345) 259 -6
266 California City 14,875 ($5,181) ($348) 283 17
267 Gustine 5,874 ($2,063) ($351) 404 137
268 Glendora 52,703 ($18,775) ($356) 263 -5
269 Murrieta 113,541 ($41,046) ($362) 255 -14
270 Lakeport 5,134 ($1,877) ($366) 267 -3
271 Gridley 6,937 ($2,572) ($371) 254 -17
272 Rohnert Park 43,598 ($16,252) ($373) 358 86
273 Burbank 107,149 ($42,672) ($398) 251 -22
274 Winters 7,292 ($2,950) ($405) 250 -24
275 Elk Grove 172,116 ($69,767) ($405) 234 -41
276 Grand Terrace 12,524 ($5,099) ($407) 286 10
277 Crescent City 6,590 ($2,706) ($411) 291 14
278 Manhattan Beach 35,991 ($14,862) ($413) 319 41
279 Sebastopol 7,786 ($3,255) ($418) 321 42
280 Santee 56,994 ($24,077) ($422) 296 16
281 Victorville 123,701 ($53,036) ($429) 305 24
282 San Anselmo 13,000 ($5,664) ($436) 287 5
283 Suisun City 29,192 ($12,730) ($436) 303 20
284 King City 14,880 ($6,591) ($443) 361 77
285 Belmont 27,388 ($12,214) ($446) 225 -60
286 Whittier 87,369 ($40,042) ($458) 300 14
287 Fairfield 116,156 ($54,094) ($466) 322 35
288 Pittsburg 72,647 ($34,067) ($469) 325 37

25th Anniversary Look Back 

The Moorlach Memo continues with Chapter 6.  In this segment, I lay it all out: “We have a County Treasurer who has borrowed staggering amounts of money to invest in highly speculative strategies that are totally inappropriate for a trustee of public funds to engage in.”

if you really want to understand what im talking about, watch “The Big Short,” a 2015 movie with a plotline reminiscent to my personal experience,   A quick view of the trailer will show you what I mean: https://www.youtube.com/watch?v=vgqG3ITMv1Q.  I just couldn’t make money betting against Citron’s bets.  

For The Bond Buyer article referenced, see MOORLACH UPDATE — Mail Bag and Group 8 — October 2, 2019.

For the introduction and first five chapters, see:

Intro — Context — MOORLACH UPDATE — Constitutionally Flawed Legislation — November 5, 2019.

Chapter 1 — Introduction — MOORLACH UPDATE — Business, Electricity and Top 48 Cities — November 7, 2019

Chapter 2 — Hold to Maturity — MOORLACH UPDATE — 3P, Cities 49 to 96 and Holding to Maturity — November 12, 2019

Chapter 3 — We Do Not Mark To Market — MOORLACH UPDATE — Measuring Insincerity and Cities 97 to 144 — November 13, 2019

Chapter 4 — Prognosis —  MOORLACH UPDATE — Officers, Audits, CIRM and Cities 145 to 192 — November 14, 2019

Chapter 5 Current Media Revelations  MOORLACH UPDATE — SB 640 and Cities 193 to 240 — November 18, 2019

 SCARING CREDIT MARKETS

 We have a County Treasurer who has borrowed staggering amounts of money to invest in highly speculative strategies that are totally inappropriate for a trustee of public funds to engage in.  That, in a nutshell, was the personal belief I communicated during my candidacy to unseat our six-term Democrat incumbent.

 Mr. Citron’s assistant, Matthew Raabe, said as much in the October 3rd issue of “The Bond Buyer,” “‘Over the years, we’ve developed a reputation for being aggressive investors.’  He said the aggressive reputation is accurate: ‘We like to take our base portfolio and leverage it.'”

 Leveraging is wonderful if the market goes with you.  It can be devastating when it goes against you. “I wish we had been right about where interest rates are going, because I would be breathing a lot easier these days,” Raabe observed.

 Citron and Raabe have assembled a “Jenga” block stack (a game where players pull out blocks and risk losing if the stack should fall).  Why was it built in the first place, especially with tax dollars? And why does a challenger questioning this scheme draw Citron’s claims of “scaring” the credit markets?  My goodness. If asking questions about a bond portfolio causes problems, then there are problems!

 Questioning Citron’s management of our tax dollars was a legitimate campaign strategy; it hit too close to home for one of my critics, Peer Swan.  Let me elaborate.

 

 

Lawmakers challenge PG&E, as utility warns of more mass power shutdowns

By Dan Morain and Judy Lin

https://calmatters.org/newsletter/lawmakers-challenge-pge-but-to-what-end/

Good morning, California.

“We don’t want Californians to think they’re living in Puerto Rico because they are not.”— Ana Matosantos testified at a Senate hearing Monday. She’s Gov. Gavin Newsom’s energy czar and also serves on a board overseeing the financial restructuring of Puerto Rico, including the island’s electric grid.

  • PG&E Chief Executive Officer William Johnson told the senators: “Repeatedly turning off power for millions of people in one of the most advanced economies in the world, even in the interest of safety, is not a sustainable solution to the wildfire threats we face.”
  • PG&E warned that 800,000 people could lose their power Wednesday and Thursday as wind-driven fire weather is expected to return.

PG&E faces tough questions

PG&E CEO William Johnson at a Senate Energy, Utilities and Communications Committee hearing Monday

California lawmakers heaped harsh criticism on PG&E for its massive power shutoffs, with some calling for a public takeover of the bankrupt utility.

Democratic Sen. Scott Wiener of San Francisco: “This company in my mind has forfeited its right to operate as an investor-owned utility.”

High hurdles and huge cost: The California Public Utilities Commission would have to revoke the utility’s franchise and the state would have to overcome the 5th Amendment, which prevents taking private property for public use without just compensation.

In a daylong Senate oversight hearing, PG&E Chief Executive Officer William Johnson said: “I do work for the shareholders, let’s not kid ourselves about that.”

He’d like to keep PG&E in private ownership but sought to strike a conciliatory tone, acknowledging that an Oct. 9 blackout affecting 2 million customers “wasn’t perfect.”

He said the utility is working to reduce the blackout footprint by one-third by next year’s wildfire season, even as the wildfire risk has dramatically increased.

  • Sen. Bill Dodd, a Napa Democrat: “I looked at what happened on Oct. 9 as a big ‘screw you’ to your customers, to the Legislature, to the governor.”
  • Sen. Mike McGuire, a Democrat who represents fire-ravaged Sonoma County: “You are behind in modernization, grid hardening and vegetation management.”

Johnson said the utility has invested $30 billion in its system over the past decade.

  • Sen. John Moorlach, a skeptical Republican from Costa Mesa: “Where did you spend that $30 billion?”

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MOORLACH UPDATE — SB 640 and Cities 193 to 240 — November 18, 2019

SB 640

The LB Report is back with a thorough review of SB 640, my effort to address our mentally ill homeless population by expanding the definition of “gravely disabled” (see MOORLACH UPDATE — Senate Bills 511, 584, 598, 496 and 640 — April 15, 2019).

The LB Report has covered this topic before and I appreciate that a news outlet is knowledgeable about what I am trying to accomplish (see MOORLACH UPDATE — Invitations and Group 9 — October 8, 2019).

If you would like to become an expert on the Lanterman-Petris-Short Act and its shortcomings, this will be a good read for you.  My office will be issuing a white paper on the LPS Act soon. And, we will have a good sprint in January to get SB 640 to the Senate Floor, also explained in the piece below.

Cities 193 to 240

The fifth group finds us halfway through California’s 482 cities and we see that the zero threshold has been crossed.  It includes two from Orange County, Yorba Linda (#193) and San Juan Capistrano (#239). Yorba Linda dropped 64 places. Its Other Post-Employment Benefits (OPEBs) went up $19.7 million, which explains two-thirds of the drop in its Unrestricted Net Assets of $27.9 million.

The cities of Sonoma, McFarland, Artesia and Adelanto have not completed and posted their June 30, 2018 Comprehensive Annual Financial Reports.  Their Unrestricted Net Positions were estimated based on the prior year’s trends.

Rank City Pop. UNP 2018 (Thou-sands) UNP/ Capita 2017 Rank Rank Change
193 Yorba Linda 69,121 $2,992 $43 129 -64
194 Atascadero 31,147 $1,015 $33 228 34
195 Encinitas 63,158 $1,964 $31 182 -13
196 Weed 2,769 $83 $30 108 -88
197 Kingsburg 12,392 $356 $29 262 65
198 Citrus Heights 87,731 $1,755 $20 177 -21
199 Jurupa Valley 106,054 $2,110 $20 200 1
200 Wildomar 36,287 $653 $18 216 16
201 Imperial 19,372 $301 $16 161 -40
202 Soledad 26,246 $319 $12 233 31
203 Watsonville 53,434 $475 $9 258 55
204 Moraga 16,991 $143 $8 186 -18
205 Los Gatos 30,601 $171 $6 120 -85
206 Firebaugh 8,112 $22 $3 238 32
207 American Canyon 20,990 ($267) ($13) 199 -8
208 El Centro 46,315 ($788) ($17) 240 32
209 Arvin 21,696 ($393) ($18) 203 -6
210 Coachella 45,635 ($1,024) ($22) 127 -83
211 Corcoran 21,450 ($699) ($33) 230 19
212 Cotati 7,716 ($258) ($33) 257 45
213 Lancaster 161,485 ($6,021) ($37) 226 13
214 Banning 31,282 ($1,240) ($40) 210 -4
215 Duarte 22,013 ($887) ($40) 145 -70
216 Carpinteria 13,704 ($624) ($46) 231 15
217 Ceres 48,326 ($2,283) ($47) 173 -44
218 Norco 26,761 ($1,297) ($48) 195 -23
219 Apple Valley 73,984 ($4,162) ($56) 217 -2
220 Lemon Grove 26,834 ($1,701) ($63) 227 7
221 Sonoma 11,390 ($810) ($71) 243 22
222 Newman 11,801 ($890) ($75) 218 -4
223 Cudahy 24,343 ($1,843) ($76) 214 -9
224 Greenfield 18,007 ($1,668) ($93) 256 32
225 Chino 86,757 ($8,062) ($93) 140 -85
226 Santa Maria 108,470 ($12,187) ($112) 252 26
227 McFarland 15,105 ($1,707) ($113) 176 -51
228 Tracy 92,553 ($10,576) ($114) 245 17
229 Paramount 56,000 ($6,436) ($115) 239 10
230 Fontana 212,000 ($26,156) ($123) 211 -19
231 Artesia 16,792 ($2,160) ($129) 213 -18
232 Sanger 26,648 ($4,031) ($151) 284 52
233 Madera 66,225 ($10,128) ($153) 268 35
234 Exeter 11,169 ($1,732) ($155) 278 44
235 Beaumont 48,237 ($7,563) ($157) 326 91
236 Adelanto 35,293 ($5,561) ($158) 143 -93
237 South El Monte 20,882 ($3,319) ($159) 215 -22
238 Ojai 7,679 ($1,255) ($163) 212 -26
239 San Juan Capistrano 36,759 ($6,050) ($165) 223 -16
240 Solana Beach 13,938 ($2,320) ($166) 190 -50

25th Anniversary Look Back

The Moorlach Memo continues with Chapter 5.  In this segment, I wrote something that was impossible to say after December 6, 1994, “I told you so.”

For more on the Piper Jaffray incident, see MOORLACH UPDATE — OC Register Coverage Look Back — September 16, 2019).  For Cuyahoga County, Ohio, see MOORLACH UPDATE — SB 359 and Cuyahoga County — October 11, 2019.

For the first five segments, see:

Intro — Context — MOORLACH UPDATE — Constitutionally Flawed Legislation — November 5, 2019.

Chapter 1 — Introduction — MOORLACH UPDATE — Business, Electricity and Top 48 Cities — November 7, 2019

Chapter 2 — Hold to Maturity — MOORLACH UPDATE — 3P, Cities 49 to 96 and Holding to Maturity — November 12, 2019

Chapter 3 — We Do Not Mark To Market — MOORLACH UPDATE — Measuring Insincerity and Cities 97 to 144 — November 13, 2019

Chapter 4 — Prognosis — MOORLACH UPDATE — Officers, Audits, CIRM and Cities 145 to 192 — November 14, 2019

CURRENT MEDIA REVELATIONS

We’ve recently seen the articles detailing how the value of  the investments managed by one regional investment firm, Piper Jaffray, plunged.

Piper Jaffray’s investment manager, Worth Bruntjen, invested over half of the portfolio in inverse floater derivatives.  An investment our County is using!  A strategy that, I believe, the unsophisticated Finance Directors of most of our cities and municipalities don’t understand nor have a clue as to the risks that they are taking.

Piper Jaffray’s portfolio of about $3.5 billion has lost over $700 million in value for its investors.  Citron’s portfolio holds roughly $3.5 billion of inverse floaters, or one-sixth of the entire holdings, that are down in value by some $1.4 billion!

My campaign claim that Citron lost some $1.2 billion in value was a mild understatement.  Those in the financial industry agreed with my claims.  Those in the government bureaucracy system had conniption fits over my criticisms.  But, as Piper Jaffray investors are discovering, higher returns really do equal higher risks.

Others are finding out the true risks, too, as the casualty list grows longer each passing day.  The front page of  the Sunday September 25, issue of “The New York Times” had this headline:  “Local Governments Lose Millions In Complex and Risky Securities.”  And now we have “Cuyahoga County Reels From Blow to Fund That Made Big Bet on Falling Interest Rates,” in the October 13th issue of “The Wall Street Journal,” thanks to the use of reverse repurchase agreements.  To quote a fellow conservative:  “I told you so.”

Annual Open House — Moved to Second Harvest Food Bank

Special Report w/ Detailed Coverage
Audio / Video / Perspective

State Senator John Moorlach Says He’d Welcome Long Beach Support For SB 640 That Would Add Language To Current CA Law Allowing Intervention To Help Severely Mentally Hill Homeless Persons Too Ill To Help Themselves

https://www.lbreport.com/news/nov19/hmls1.htm

The fatal 2011 beating by Fullerton police officers of Kelly Thomas, a schizophrenic homeless man, awakened then-Orange County Supervisor John Moorlach to issues involving governmental interactions with severely mentally ill persons. Eight years later, despite major taxpayer expenditures and escalating governmental interactions, California cities including Long Beach continue to allow seriously mentally ill homeless persons to wander the streets, inhumanely depersonalized while creating serious health and safety issues for themselves and others.

The incompassionate and ineffective status quo has led now-state-Senator Moorlach to introduce SB 640, a bill that would add language to a current state law to enable intervention that could help severely mentally ill homeless individuals. These are persons with mental illness so severe (including schizophrenia) that the person doesn’t realize he/she is ill and needs help for their safety and sometimes for the safety of others.

SB 640 would amend the “Lanterman-Petris-Short Act” – a state law that currently permits the involuntarily treatment of individuals who are “gravely disabled” — to also include [legislative counsel’s digest] “a condition in which a person, as a result of a mental health disorder, is incapable of making informed decisions about, or providing for, the person’s own basic personal needs for food, clothing, shelter, or medical care or shelter without significant supervision and assistance from another person and, as a result of being incapable of making these informed decisions, the person is at risk of substantial bodily harm, dangerous worsening of a concomitant serious physical illness, significant psychiatric deterioration, or mismanagement of the person’s essential needs that could result in bodily harm.”

SB 640 gained early support from the CA District Attorneys Association, the CA Police Chiefs Association, the City of Santa Monica, and NAMI Sacramento but drew opposition from the American Civil Liberties Union, CA Hospital Association (unless amended), Disability Rights California, Mental Health America of Northern CA, SEIU California and the Western Center on Law and Poverty.

At an April 8, 2019 hearing in the state Senate Health Committee (video below), Sen. Moorlach explained his basis for reforming current state law. He brought witnesses who offered compelling testimony in support of SB 640 and pleaded with Committee members to move the bill forward. The Committee chair, state Senator Richard Pan (D, Sacramento) and others among the Committee’s Democrat majority politely thanked Sen. Moorlach and his witnesses but indicated they’d vote “no” on his bill, an action that would prevent SB 640 from advancing further.

Stymied for the moment, Sen. Moorlach offered to make SB 640 a “two year bill,” a way to amend the bill to address stated objections.

To see/hear what took place in the state Senate Health Committee hearing on SB 640, click the VIDEO below:

https://moorlach.cssrc.us/content/senate-bill-640-mental-health-services-gravely-disabled

The Committee ultimately withheld a vote on SB 640. The bill remains in the state Senate Health Committee.

In June 2019, former LB Councilwoman Lena Gonzalez was elected to the state Senate. She is now a member of the state Senate Health Committee. LBREPORT.com reported on SB 640 in August 2019..

SB 640 faces legislative deadlines in late January 2020. By Jan. 24, 2020, the state Senate Health Committee must hear and report the bill to the state Senate floor and by Jan. 31, SB 640 must pass the full state Senate. If that doesn’t happen, SB 640 will die.

In a November 15, 2019 telephone conversation invited by LBREPORT.com, we asked Senator Moorlach if Long Beach Mayor Robert Garcia (who doesn’t set city policy) or any LB Councilmember(s) (who do set policy) or LB city staff (engaged in homeless/vagrancy issues) had contacted him about SB 640. Sen. Moorlach politely indicated that he didn’t recall but also indicated he’d welcome support from the City of Long Beach (L.A. County’s second largest city.) That could include a Long Beach City Council resolution supporting SB 640. Any LB Councilmember(s) could agendize this for Council action “on any Tuesday.”

To hear LBREPORT.com’s Nov. 15 telephone conversation with Sen. Moorlach, click here (MP3 file, lightly edited)

Senator Moorlach has a robust webpage devoted to SB 640. It includes links to video and statewide coverage of the issue at this link.

LBREPORT.com invites our readers to share this article on social networks and with the offices of their Councilmembers and state lawmakers. We also invite readers who receive responses from their elected officials to share them with us for possible publication.

Additional legislative background

An April 2019 state Senate Health Committee Legislative Analysis provided details of SB 640 here:

…According to the author, California is failing its seriously mentally ill. Current law states that a person is gravely disabled if, as a result of a mental health disorder, he or she cannot provide for their basic needs for food, clothing, and shelter. This law was intended to serve as a protection to individual liberties but has created a system that, instead of helping the most seriously mentally ill, relegates them to the streets, jails, and emergency rooms. Better metrics are needed to help seriously mentally ill individuals that are simply powerless to provide for their own personal well-being. This is especially important when the absence of significant supervision and assistance leaves the individual at risk of substantial bodily harm. Clarifying the definition of “gravely disabled” will be a step towards repairing a system that is failing to serve those who need it most.…The LPS [Lanterman-Petris-Short] Act provides for involuntary commitment for varying lengths of time for the purpose of treatment and evaluation, provided certain requirements are met. Additionally, the LPS Act provides for LPS conservatorships, resulting in involuntary commitment for the purposes of treatment if an individual is found to meet the grave disability criteria. Typically one first interacts with the LPS Act through a 5150 hold, which allows a designated facility to involuntarily commit a person for 72 hours for evaluation and treatment if they are determined to be, as a result of a mental health disorder, a threat to self or others, or gravely disabled. The peace officer or other authorized person who detains the individual must determine and document that the individual meets this standard. When making the determination or determining that a person should be placed on a 5150 hold, the peace officer or other authorized person may consider information about an individual’s historical course of a mental disorder, which includes evidence presented by a person who has provided or is providing mental health or related support services to the person on the 5150 hold; evidence presented by one or more members of the family of the person on the 5150 hold; and, evidence presented by the person on the 5150 hold, or anyone designated by that person, if the historical course of the person’s mental disorder has a reasonable bearing on making a determination that the person requires a 5150 hold.

Following an initial 5150 hold, a person may be certified for intensive treatment, which initially permits a person to be held for an additional up to 14-days, without court review, if they are found to still be a danger to self or others, or gravely disabled. When determining whether the person is eligible for a 14-day detention, the professional staff of the agency or facility providing evaluation services must find that the person has been advised of the need for, but has not been willing or able to accept, treatment on a voluntary basis. A notice of certification is required for all persons certified for intensive treatment, and a copy of the notice for certification is required to be personally delivered to the person certified, the person’s attorney, or the attorney or advocate, as specified. If after the initial 14 days a person is still found to remain gravely disabled and unwilling or unable to accept voluntary treatment, the person may be certified for an additional period of not more than 30 days of intensive treatment. A person cannot be found at this point to be gravely disabled if he or she can survive safely without involuntary detention with the help of responsible family, friends, or others who indicate they are both willing and able to help.

The LPS Act provides for a conservator of the person, of the estate, or of both the person and the estate for a person who is gravely disabled as a result of a mental health disorder or impairment by chronic alcoholism or use of controlled substances. The person for whom such a conservatorship is sought has the right to demand a court or jury trial on the issue of whether they meet the gravely disabled requirement. The purpose of an LPS conservatorship is to provide individualized treatment, supervision, and placement for the gravely disabled person. Current law also deems a person as not being gravely disabled for purposes of a conservatorship if he or she can survive safely without involuntary detention with the help of responsible family, friends, or others who indicate they are both willing and able to help.

SB 1045 (Wiener and Stern, Chapter 845, Statutes of 2018) established, under a five-year pilot project in San Francisco, Los Angeles, and San Diego Counties, a conservatorship process for individuals who are incapable of caring for their own health and well-being due to a serious mental illness and substance use disorder as evidenced by “frequent detention” for evaluation and treatment under 72-hour involuntary holds. Frequent detention is defined as having eight or more 5150 holds in the preceding 12 months.

The Committee legislative analysis summarized positions on the bill pro and con as follows:

Support. The City of Santa Monica states that although the current definition of gravely disabled was intended to protect individuals from inappropriate, indefinite, and unnecessary involuntary commitments, it has created a system that often relegates those who are gravely disabled to the streets, jails, and emergency rooms, and has failed to deliver care that is desperately needed. The City of Santa Monica argues that this bill would clarify gravely disabled to more closely align with the original intent of the LPS Act and to provide care that the current system has failed to deliver.Support if amended. Tenet Healthcare recommends that this bill be amended to pilot modernization of conservatorship programs in counties that have also adopted specific, voluntary community mental health and sheltering programs. Tenet states that ultimately the state must have resources to expand the continuum of care for behavioral, medically fragile and homeless patients. Tenet notes, for example, that Orange County has availed itself of two very appropriate tools: Laura’s Law/Assisted Outpatient Treatment and whole person care pilot programs. Tenet argues that without county support, wrap-around services, and vested community partnerships, simply transporting the gravely disabled population to a hospital emergency department (ED) will likely only exacerbate present bottlenecks in that ED caused in part by patients that we are unable to discharge by the hospital.

Opposition. Disability Rights California, the American Civil Liberties Union, and the Western Center on Law and Poverty write as a coalition to argue that this bill needlessly expands LPS to permit an undefined standard by which to impose involuntary care for individuals in a restrictive and confined environment; proposes a solution that does not meet the stated goals of addressing homelessness; and, does nothing to ensure that those proposed to be conserved under the expansion will be provided with adequate food, clothing, shelter, or medical and behavioral health care. The coalition states that many terms in the expanded definition are undefined and expansively broad and that the bill does nothing to promote uniformity between the counties and, to the contrary, substitutes a vastly more confusing standard for every stakeholder in the LPS system to attempt to learn and attempt to consistently apply. The coalition further states that involuntary treatment means the county has the duty to treat and house conservatees, which includes making physical and mental health services actually available, and this bill puts the cart before the horse since the counties are already unable to provide services and supportive housing for this population. The coalition states that they do not believe this bill has specified a clear or factual underpinning to support moving away from the current gravely disabled standard that has served for decades to balance the needs of individuals with behavioral illnesses and the protection of their own and others safety. Mental Health America of Northern California (MHA NorCal) shares similar concerns as the coalition. MHA NorCal also argues that efforts to institutionalize people with mental health conditions is not only counterproductive to the recovery model embraced by California but may also be a violation of civil rights. MHA NorCal also notes that Laura’s Law has been implemented in various counties, which consists of court-ordered coercive treatment with appropriate conditional elements that promote opportunities to remain in community services. SEIU California shares similar concerns as the coalition and argues that this bill would not assist the state with a more uniform application of conservatorships. Instead, it would create a more confusing set of criteria which will be newly reinterpreted and tested throughout California’s various jurisdictions in myriad ways. SEIU California states that by opening the definition up to include individuals who need help with providing for their basic needs, it fears it would be even harder to provide help on a voluntary basis to our most in-need populations.

Oppose unless amended. CHA states that this bill will only make it more challenging for hospitals to meet the needs of an increasing volume of patients with behavioral health needs. Over a six-year period, data shows that ED utilization increased by a staggering 47% for people with behavioral health conditions, while overall ED use increased only 14%. CHA argues that this bill expands criteria for 5150s and causes an unintended ripple effect that will negatively impact patient care such that under the expanded definition many patients with mental health disorders could be involuntarily detained simply because they do not follow a doctor’s recommended treatment; patients on 5150s would linger in EDs; and hospitals could not forcibly treat patients but would need to keep them. CHA argues that broader policy changes and investment need to be made, such as: standardization of involuntary commitment laws; mandated assisted outpatient treatment in all counties; and adequately funding California’s overburdened court and public conservatorship system.

Additional Long Beach background

In L.A. County’s second largest city, Long Beach Mayor Garcia (who doesn’t set city policy) has acknowledged homelessness is complex with multiple aspects but has tried to steer discussion mainly toward building more housing units (including below market/subsidized “affordable” housing.) In 2018, Mayor Garcia chose an “Everyone Home Task Force” that included a number of affordable (subsidized) housing developers and homeless service providers. It produced a Dec. 2018 report contending LB (parts of which are already densely populated) needs thousands of new housing units. On a separate track, Councilman Rex Richardson has been soliciting contributions (as of June 30 over $200,000) from affordable housing developers and homeless service providers for a future revenue-raising (read: tax imposing) LB ballot measure (LBREPORT.com coverage here.)

The Garcia-chosen Task Force acknowledged that a 2017 Long Beach homeless count found roughly a third (31%) reported a mental illness and 21% report a substance use disorder but its recommendations focused on housing, offering mainly conventional bureaucratic responses regarding mental illness issues. Under the heading “Increase access to Behavioral Health and Physical Health Services” the Garcia Task Force wrote:

Improving access to services is an important step to accessing housing and helping people maintain their housing once housed. In addition, our hospitals are impacted by those experiencing homelessness who have physical and behavioral health conditions. With state legislation in place that precludes discharging a person into homelessness, there is a tremendous need to increase collaboration among hospitals and community partners to access shelter and housing, as well as to increase the number of, and access to, recuperative care beds and sobering center opportunities in the City.

The Garcia Task Force recommended an agreement with LA County’s Housing for Health program for “a coordinated referral program to serve the City’s most vulnerable and most frequent users of City resources”; “partnering” with LA County and the State “to implement a substance use detox center, sobering center, and increased recuperative care beds and work to implement a safe needle exchange program; substance use treatment opportunities.”

It also advised a “significantly increase [in] long-term mental healthcare capacity” and “to reform the conservatorship rules and processes to make it easier to get people the care they need and maintain it as long as the level is appropriate.” However that measure is already in place. SB 1045, enacted in 2018 and co-authored by state Senator Scott Wiener, established a five-year pilot project in San Francisco, Los Angeles, and San Diego Counties for “a conservatorship process for individuals incapable of caring for their own health and well-being due to a serious mental illness and substance use disorder as evidenced by ‘frequent detention’ for evaluation and treatment under 72-hour involuntary holds.”

SB 640 would go where some in Long Beach and Sacramento haven’t yet gone.

Developing.

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MOORLACH UPDATE — Officers, Audits, CIRM and Cities 145 to 192 — November 14, 2019

Public Safety Quality Control

The big California story this week has been the investigative reporting on California’s police forces and the release of embarrassing personnel records.

I co-authored SB 1421, which required the disclosure of personnel records of public safety officials in certain categories.  At that time, I did not know what was hidden (see MOORLACH UPDATE — SB 1421 and SB 828 — May 31, 2018 and MOORLACH UPDATE — SB 1421 and CNPA — February 7, 2019).

The series of investigative pieces that have been released have this preamble:

In early 2019, reporters from the Investigative Reporting Program at the UC Berkeley Graduate School of Journalism obtained a list of criminal convictions from the past decade of nearly 12,000 current or former law enforcement officers and people who applied to be in law enforcement. The records — provided by the state’s Commission on Peace Officer Standards and Training in response to a Public Records Act request — didn’t indicate which individuals on the list actually worked in law enforcement nor the departments where they were employed.

Instead of providing any more information, POST referred the reporters to state Attorney General Xavier Becerra’s office, which wrote the reporters a letter calling the release of the records “inadvertent” and indicating mere possession of the document was a crime. The letter instructed the reporters to destroy the list or face legal action.

Instead, the reporting program formed an unprecedented collaboration to investigate the list, involving three dozen news outlets across the state.

The Sacramento Bee is one of many newspapers throughout the state publishing this investigative journalism project, with the follow-up piece below.

Office of Inspector General

A recent federal audit of California nursing homes reflected a deficiency by the Department of Public Health needing some attention.  I sit on the Joint Legislative Audit Committee, which assigns projects to the State Auditor for oversight. The Kaiser Health News piece highlights an area that may qualify for such an audit request.

CIRM

The San Diego Union-Tribune provides a letter to the editor from a man who was put off by my substantive critiques of the California Institute for Regenerative Medicine and its failure to provide the cures it fervently promised in 2004 during its first campaign for a $3 billion bond (see MOORLACH UPDATE — CIRM and School District’s Group 5 — September 26, 2019).  Fortunately, the letter writer provides an insight to his bias by stating the name of his affiliation.  And, although questioning my knowledge of the subject, he refers to me as an Assemblymember. You’ve got to love the subtle humor in it all.  UC San Diego Health has an Alpha Stem Cell Clinic that has received $35,656,270 through a dozen CIRM grants.

If a $5.5 billion bond is approved in 2020 and issued, and it results in another $5.5 billion in interest costs, then it would take 763,888 individual taxpayers paying $300 per month to honor the $275 million annual obligation.  What will Sacramento cut out of its budget to satisfy this commitment? Roads? Schools? Public safety? Isn’t it great when government strays from its core mission and drifts into expensive causes the private sector should be addressing?

Cities 145 to 192

The fourth group of 48 cities includes two from Orange County:  Mission Viejo (#164) and Laguna Hills (#178). Both cities moved up in the rankings.

The cities of Blue Lake and Windsor are highlighted, as we’re still waiting for their audited financial statements (see MOORLACH UPDATE — Business, Electricity and Top 48 Cities — November 7, 2019).

Let’s take a sample to see what’s occurring with California’s cities, as the Governmental Accounting Standards Board has required the reporting of liabilities like Retiree Medical on the Balance Sheet.

The city of Ontario (#179) dropped 117 places.  It has a very-user friendly website explanation for its Comprehensive Annual Financial Report (see  https://www.ontarioca.gov/sites/default/files/Ontario-Files/Administrative-Services/fiscal-services/cafr_executive_summary_june_30_2018.pdf).  It shows the Unrestricted Net Assets decreased by $146.7 million, while its Noncurrent Liabilities increased by $199.0 million.  But, when reviewing the actual CAFRs for 2017 (see https://www.ontarioca.gov/sites/default/files/Ontario-Files/Administrative-Services/Annual-Operating-Budgets/CAFR/cafr_2017_websitecd.pdf) and 2018 (see https://www.ontarioca.gov/sites/default/files/Ontario-Files/Administrative-Services/Annual-Operating-Budgets/CAFR/20181218_cafr_fiscal_year_ending_june_2018revised.pdf), these amounts are for the combined Governmental Activities and Business-Type Activities.

For our study, I only look at the Governmental Activities.  This shows that the Unrestricted Net Assets declined by $163.6 million.  Its Other Post-Employment Benefits (OPEBs) increased by $166.3 million, explaining the change.  But, its Net Pension Liabilities also went up by $32.7 million. An increase in Cash and Investments of $58 million may explain why the Unrestricted Net Assets did not take a harder hit.

The good news?  Even after adding this significant amount of debt to the balance sheet, the city of Ontario still has an Unrestricted Net Asset balance above zero.  The next group of 48 cities will dip below this critical threshold.

For the first group, see MOORLACH UPDATE — Business, Electricity and Top 48 Cities — November 7, 2019.

For the second group, see MOORLACH UPDATE — 3P, Cities 49 to 96 and Holding to Maturity — November 12, 2019.

For the third group, see MOORLACH UPDATE — Measuring Insincerity and Cities 97 to 144 — November 13, 2019

Rank

City

Pop.

UNP 2018 (Thou-sands)

UNP/ Capita

2017 Rank

Rank Change

145

Temecula

113,181

$31,700

$280

158

13

146

Rosemead

55,267

$15,299

$277

165

19

147

Palmdale

158,905

$43,373

$273

167

20

148

Hughson

7,738

$2,087

$270

168

20

149

Wasco

27,691

$7,399

$267

197

48

150

Calistoga

5,334

$1,415

$265

110

-40

151

San Jacinto

48,146

$12,281

$255

163

12

152

Blue Lake

1,280

$316

$247

115

-37

153

Ripon

15,847

$3,847

$243

46

-107

154

Waterford

9,149

$2,217

$242

164

10

155

Tehachapi

12,299

$2,939

$239

179

24

156

Tehama

430

$102

$237

207

51

157

Lakewood

81,179

$17,346

$214

138

-19

158

Temple City

36,411

$7,753

$213

151

-7

159

Goleta

31,949

$6,766

$212

98

-61

160

Burlingame

30,294

$6,415

$212

298

138

161

Yucca Valley

21,834

$4,518

$207

172

11

162

Bellflower

77,682

$15,797

$203

181

19

163

Orland

7,932

$1,583

$200

160

-3

164

Mission Viejo

95,987

$17,421

$181

171

7

165

Imperial Beach

28,163

$4,934

$175

74

-91

166

El Paso de Robles

31,559

$5,499

$174

232

66

167

Visalia

136,246

$22,633

$166

189

22

168

Ione

8,058

$1,268

$157

174

6

169

Yreka

7,840

$1,160

$148

188

19

170

Corona

168,574

$23,750

$141

95

-75

171

Hillsborough

11,543

$1,586

$137

59

-112

172

Calimesa

8,876

$1,074

$121

202

30

173

Farmersville

11,443

$1,282

$112

149

-24

174

Kerman

15,083

$1,630

$108

194

20

175

Lincoln

48,591

$5,020

$103

317

142

176

Moreno Valley

207,629

$20,689

$100

191

15

177

Dos Palos

5,679

$563

$99

204

27

178

Laguna Hills

31,818

$2,956

$93

198

20

179

Ontario

177,589

$16,251

$92

62

-117

180

Windsor

28,060

$2,456

$88

114

-66

181

Walnut Creek

70,667

$6,045

$86

244

63

182

Atherton

7,135

$609

$85

65

-117

183

Perris

77,837

$6,580

$85

178

-5

184

Escalon

7,558

$628

$83

224

40

185

Fresno

538,330

$43,381

$81

209

24

186

Rocklin

66,830

$5,318

$80

237

51

187

Lemoore

25,892

$1,833

$71

183

-4

188

Huron

7,302

$498

$68

187

-1

189

Mendota

12,051

$759

$63

169

-20

190

Corning

7,515

$468

$62

260

70

191

Port Hueneme

23,929

$1,490

$62

152

-39

192

Marina

22,424

$1,153

$51

112

-80

25th Anniversary Look Back

The Moorlach Memo continues with Chapter 4.  In this edition, I share a version of that old proverb, “Be careful what you wish for.”  I also reiterate how the Orange County Investment Pool implosion will occur and predict its debilitating long-term impacts in the last paragraph.

For the October 13, 1994 OC Register piece mentioned below, go to MOORLACH UPDATE — Burying Electric Lines and Bills — October 13, 2019.

For the first four segments, see:

Intro — Context — MOORLACH UPDATE — Constitutionally Flawed Legislation — November 5, 2019.

Chapter 1 — Introduction — MOORLACH UPDATE — Business, Electricity and Top 48 Cities — November 7, 2019

Chapter 2 — Hold to Maturity — MOORLACH UPDATE — 3P, Cities 49 to 96 and Holding to Maturity — November 12, 2019

Chapter 3 — We Do Not Mark To Market — MOORLACH UPDATE — Measuring Insincerity and Cities 97 to 144 — November 13, 2019

PROGNOSIS

Am I screaming sour grapes?  No. I am very grateful that I did not unseat our incumbent.  Mr. Citron needs another term to clean up the mess he has created.

Am I overreacting?  No. The portfolio holds some $3.5 billion in “inverse floater derivatives” that have already declined some forty percent in value.  And, with interest rates continuing to rise, Citron’s problems continue to become exasperated.

Let’s continue with our scenario. The $22 billion in investments will pay out their agreed to interest rates (or a lower amount in the case of the inverse floater derivatives) for the next four years.  Like a rental property with a four-year fixed rent agreement, our income will remain constant (and capped).

However, our County has to service the debt on the $14.6 billion.  The terms, for the most part, are renewable contracts that come due every three months as the short-term interest rates increase, as they have.  Accordingly, our costs will increase every three months. Citron’s borrowing costs are already up some sixty percent from a year ago.

With revenues fixed, or decreasing, and costs going up as short-term interest rates increase, our County’s portfolio will generate ever decreasing yields.  If the short-term interest rates increase to a high enough rate, we may not see a yield at all.

Citron confirmed this fact in the October 13 “Register” article, “Citron says he zigged, Fed zagged:”  “he said his forecasting error will mean reduced interest earnings in the coming year.”  

Should the yield become noncompetitive, the participating municipalities will request their funds in order to move them elsewhere.  After all, this is a competitive society that we live in. So, if the lenders haven’t shut Citron down first, these liquidations certainly will.  Our “Armageddon” will occur. Citron’s worst nightmare will transpire and our County will suffer from it for decades to come. All the same he makes the claim that the “investors[‘] . . . principal remains safe.”  Now there’s either a true optimist or a charlatan.

California lawmakers: Time to

consider revoking badges of

problem officers

BY ROBERT LEWIS AND DAVID DEBOLT

INVESTIGATIVE REPORTING PROGRAM AND BAY AREA NEWS GROUP

https://www.sacbee.com/news/california/article237339084.html

State lawmakers said this week that it’s time for California to consider joining 45 other states that can revoke the badges of officers who commit crimes and other serious misconduct.

The call for action comes in the wake of a six-month investigation from a statewide coalition of news organizations, including McClatchy, that revealed more than 80 law enforcement officers working today in California have a prior criminal conviction.

“We need to do something about this,” said state Sen. Hannah-Beth Jackson, a Democrat and member of the Public Safety Committee representing Santa Barbara and part of Ventura County. “Having convicted criminals on our police force is just not O.K. in any way, shape or form.”

With demands for more police accountability growing in Sacramento, Democrats and a Republican on state public safety committees said they are deeply concerned about revelations in the series.

Jackson said she was “upset and angered,” particularly about officers routinely pleading down domestic violence charges to lesser crimes that allow them to keep their guns and in some cases remain on the job.

California is one of only five states in the country that doesn’t “decertify” an officer for misconduct — or essentially take away a license to work in law enforcement. Instead, almost all hiring and firing decisions are up to local departments.

So while many departments hold officers to the highest ethical standards, there are some that allow officers accused — and even convicted — of egregious misconduct to stay on the force.

And some small rural departments have a history of hiring cast-off cops. For example, the news coalition’s investigation found the police department in the Kern County city of McFarland hired more than a dozen officers in the last decade — nearly one of every five officers — who were either sued or fired from another department for misconduct or convicted of a crime.

Jackson said the question now for her fellow legislators is: “Do we want some kind of state oversight?”

At least one Republican legislator agrees. State Sen. John Moorlach, who represents parts of Orange County, is vice chair of the senate’s Public Safety Committee. Moorlach said he’d likely support more state oversight, including decertification.

“It’s the right thing to do. It’s not a partisan issue. It’s about quality control,” Moorlach said.

Assemblywoman Buffy Wicks, an Oakland Democrat who sits on the Assembly’s Public Safety Committee, agreed. “There’s no denying that we need to explore changes once this level of sunlight is cast on law enforcement,” she said in a statement.

SECRET DATABASE OF COPS

The series examined the cases of 630 current and former officers convicted of a crime in the past decade, featuring many of the cases in a searchable database. The exact number of officers with convictions is unknown.

Earlier this year, reporters from the Investigative Reporting Program at UC Berkeley obtained a secret state list of nearly 12,000 officers and applicants with convictions in the past decade. But the state Attorney General’s Office refused to say who on the list was an actual officer. Reporters ultimately were able to review about 1,000 court files and used news clips to identify other cases.

Attorney General Xavier Becerra has refused to answer questions about the list and his office declined numerous interview requests before the series ran and again for this story.

Michael Rains, a Bay Area-based lawyer who represents law enforcement, including officers named in the newspapers’ investigation, said he was “dismayed” to read about the crimes committed by police officers, calling them a “smear on the great name and reputation of their colleagues.”

“I’m a firm believer the badge is something that should be valued and honored by law enforcement officers,” Rains said. But, “rather than saying we have 630 bad apples, that’s the wrong way to look at it. We have close to 80,000 good ones. Those are the ones we should be thanking for all that they do.”

California Police Chiefs Association President Ronald Lawrence echoed those comments earlier this week in a statement, stressing that only a tiny percentage of officers are convicted of crimes. There are about 79,000 sworn officers in California.

“Our criminal justice system, for both the public and peace officers, must offer due process as well as pathways for an individual to accept accountability and correct their mistakes,” Lawrence wrote. “For those who are deserving and willing to embrace accountability and retraining, there must be a way to retain experienced, well-trained officers in an environment that is already difficult to recruit new hires.”

Rains, who is also a former police officer, said he’s seen examples around the state of troubled small agencies like McFarland, due to a combination of low pay and benefits and a smaller pool of applicants.

“Departments are lamenting the fact that the people they are hiring don’t have in some cases the level of education, life experience, and maturity that in an ideal world they’d prefer,” Rains said. “If those agencies get in such trouble they can’t find quality candidates and individuals that have not had problems elsewhere, they should call the county sheriff to bail them out.”

Powerful police unions have had strong pull over the years in Sacramento, but the latest call for more accountability comes after California enacted a law known as SB 1421 that opened some officer disciplinary records to the public for the first time. However, after unsuccessfully fighting the law in court, many departments have been slow to comply.

Rains said he is not opposed to the state asserting some control over decertifying officers, but he would “insist it be a fair, impartial and thorough investigation” that sometimes does not occur at the local level due to what he called “politics and mob rule.”

“That’s a joke,” Rains said, “and that’s not fair to anybody.”

This story is part of a collaboration of news organizations throughout California coordinated by the Investigative Reporting Program at UC Berkeley and the Bay Area News Group. Reporters participated from more than 30 newsrooms, including MediaNews Group, McClatchy, USA Today Network, Voice of San Diego, and Reveal from the Center for Investigative Reporting.

Email us at cacriminalcops.

NURSING HOME SAFETY VIOLATIONS PUT RESIDENTS AT RISK, REPORT FINDS

Barbara Feder Ostrov, Kaiser Health News

https://www.columbiabasinherald.com/article/20191114/AP/311149871

As huge swaths of California burned last fall, federal health officials descended on 20 California nursing homes to determine whether they were prepared to protect their vulnerable residents from fires, earthquakes and other disasters.

The results of their surprise inspections, which took place from September to December of 2018, were disturbing: Inspectors found hundreds of potentially life-threatening violations of safety and emergency requirements, including blocked emergency exit doors, unsafe use of power strips and extension cords, and inadequate fuel for emergency generators, according to a report released Thursday by the U.S. Department of Health and Human Services Office of Inspector General.

The nursing home residents “were at increased risk of injury or death during a fire or other emergency,” the report concluded.

The threat is not theoretical in a state that has been ravaged by natural disasters: One of the nursing homes that was inspected burned down in a wildfire afterward, so the report only includes results for the 19 remaining facilities, which it does not identify.

“The fact that one of the nursing homes inspected was later destroyed by a wildfire speaks to the grave danger residents are facing today,” said Mike Connors of the advocacy group California Advocates for Nursing Home Reform. He called the findings alarming but not surprising.

Even though the report didn’t name the nursing home that was destroyed, the California Association of Health Facilities, which represents most of the state’s skilled nursing facilities, identified it as one that burned down in the November 2018 Camp Fire, the deadliest wildfire in the state’s history.

Craig Cornett, CEO and president of the association, said all the residents were evacuated safely from that home — and from two others destroyed in the same fire. Hundreds of other nursing homes also have responded to emergencies in the past three years without loss of life, he said, which shows that “the deficiencies in the report do not reflect true facility readiness.”

The association is concerned about safely violations, he added, but “this is an example of bureaucracy equipped with blinders.”

The federal auditors said the violations occurred because of poor oversight by management and high staff turnover at the homes. But they also criticized the California Department of Public Health, the agency responsible for overseeing nursing homes in the state, for not ensuring the homes complied with federal safety and emergency requirements.

In some cases, the state’s own inspectors had previously cited nursing homes for the same problems, but did not inspect the facilities again to ensure they had been fixed, the report said.

The department “can reduce the risk of resident injury or death by improving its oversight,” the report said. For example, it could “conduct more frequent site surveys at nursing homes to follow up on deficiencies previously cited rather than relying on reviews of documentation submitted by nursing homes.”

The public health department told the auditors it had followed up with the 19 remaining homes to ensure they were addressing the problems auditors identified. But the state disagreed with the auditors’ recommendation to inspect nursing homes more frequently, saying in a letter to the auditors that federal rules don’t require onsite visits to determine whether problems have been fixed — and that the agency simply does not have enough inspectors.

The department declined a California Healthline request for comment.

The Office of Inspector General is auditing nursing homes across the nation that receive payments from the public health insurance programs Medicare or Medicaid to determine whether the facilities meet the stricter federal safety and emergency guidelines that were adopted in 2016. The auditors did not choose the 20 nursing homes randomly out of the approximately 1,200 statewide, but rather selected those in fire- and earthquake-prone regions, as well as ones already on notice for health and safety violations.

The inspectors found a total of 325 violations at the 19 homes. Among them:

Two of the homes had pathways leading to emergency exit doors that were blocked, including one exit door blocked by a pallet. 16 had violations related to their fire alarm and sprinkler systems, including two that didn’t have their fire alarm systems routinely tested and maintained. All had violations related to electrical equipment, including using power strips that did not meet requirements or were unsafely connected to appliances or other power strips. Eight had not properly inspected, tested and maintained their emergency generators, which provide electricity for critical medical equipment during a power outage. Two didn’t have enough generator fuel to last 96 hours. Generator power has become critical for nursing homes in recent months amid widespread power shutdowns aimed at preventing wildfires. Three nursing homes’ emergency plans didn’t address evacuations.

“We don’t want reports like this,” said state Sen. John Moorlach (R-Costa Mesa). “It sounds like maybe we need to ask the state auditor to see if the site visits done by the state are being done thoroughly.”

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

Readers React: Stem cell research can benefit every person

Stem cell research is underfunded nationally.

https://www.sandiegouniontribune.com/opinion/letters-to-the-editor/story/2019-11-14/readers-react-stem-cell-research-can-benefit-every-person-utak

Re “Promises were never kept while conflicts of interest abound” (Sept. 26): Assemblyman John M. W. Moorlach’s piece shows little knowledge of research and its benefits — which could save his life someday, as he has no contract with the almighty.

Funds for medical research, with immeasurable benefits, like the work of Jonas Salk, shouldn’t compete with immediate needs addressed in the annual budget. That’s why it’s done with bonds paid for over 40 years.

Stem cell research is underfunded nationally. More funding will drive exploration to treat diseases that kill or make life miserable. Like the Cancer Moonshot, California Institute for Regenerative Medicine (CIRM) fills that need.

CIRM funds created therapies for which no solutions existed, and made California the leader in this crucial science. Moorlach’s minority view could resonate with those uninformed about how research works and helps us.

Such voices must not dictate our scientific future which, if allowed to thrive, will benefit everyone.

Matthew C. Strauss

UC San Diego Health Board of Advisors

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MOORLACH UPDATE — Measuring Insincerity and Cities 97 to 144 — November 13, 2019

Electrifying Insincerity

For a brief time, former Governor Jerry Brown studied to become a Jesuit priest.  I’m sure he is familiar with the Book of Jonah, as most are. God not only appointed a large fish, but he also appointed a scorching east wind (Jonah 4:8).  Santa Ana, Diablo and Sirocco hurricane-force winds have been here for millennia.

I’m not sure if there is an increase in wind intensity due to climate change.  However, Jerry Brown believes human emissions are causing greater winds than the planet has ever experienced.  He just doesn’t practice it with conviction and sincerity.

I have pursued three simple wildfire goals. First, prevent the failure of power lines in wildland urban interface areas to protect the lives of the populations residing there.   Second, measure greenhouse gasses generated by wildfires because wildfires generate more greenhouse gases than all of California’s fossil fuel powered cars running for an entire year.  Last, prioritize more use of Cap and Trade tax revenues to harden electrical assets.

It’s a little insincere to mandate that more vehicles be powered by electricity, but not improve the antiquated infrastructure that delivers this energy source.  Thankfully, an editorial writer for the OC Register and San Gabriel Valley Tribune points this out.

In 2016, I authored legislation to harden electrical assets in high risk wildfire zones only to see Democrat Jerry Brown veto SB 1463.  Subsequently, we all watched more than 120 residents perish in wildfires, in places like Santa Rosa and Paradise, caused by sparking overhead electrical lines.  Sincerely, who really should be talking about having blood on their soul?

I then recommended using Cap and Trade tax revenues to harden overhead electrical lines only to have Democrats on the Senate Environmental Quality Committee kill SB 1463 (2018).  Ironically, SB 901 (Dodd), a bill addressing wildfires that passed at the conclusion of the 2018 legislative session, which would include my recommendation but at a lower amount of Cap and Trade funding, to address hardening of electrical infrastructure.

This year I introduced SB 535 because I wanted the California Air Resources Board to quantify the greenhouse gas generated by wildfires, in order to shame the utilities, only to have the Democrats kill the bill in Assembly Appropriations.  The insincerity abounds.

Cities 97 to 144

As Peter Drucker taught us, if you don’t measure it, you can’t manage it.  That’s why we provide the rankings of California’s 482 cities based on their per capita Unrestricted Net Positions.  Not to be mean, but to provide a temperature gauge so that areas where some are struggling can be addressed proactively now, instead of reactively later, which seems to be the management style of  the majority party in Sacramento.

The third group of 48 cities includes six from Orange County:  Aliso Viejo (#98), Villa Park (#107), La Palma (#110), San Clemente (#127), Rancho Santa Margarita (#128), and Stanton (#135).  Five of the six cities moved up in the rankings.

The city of Fowler is highlighted, as we’re still waiting for its audited financial statements (see MOORLACH UPDATE — Business, Electricity and Top 48 Cities — November 7, 2019).

For the second group, see MOORLACH UPDATE — 3P, Cities 49 to 96 and Holding to Maturity — November 12, 2019.

Rank City Pop. UNP 2018 (Thou-sands) UNP/ Capita 2017 Rank Rank Change
97 Sierra Madre 10,986 $6,263 $570 180 83
98 Aliso Viejo 51,950 $29,312 $564 107 9
99 Fillmore 15,953 $9,001 $564 111 12
100 Commerce 13,067 $7,084 $542 15 -85
101 Orange Cove 9,469 $5,131 $542 97 -4
102 Hollister 36,703 $19,647 $535 118 16
103 Dunsmuir 1,680 $888 $529 116 13
104 San Marcos 95,768 $48,322 $505 94 -10
105 Loma Linda 23,946 $11,961 $499 132 27
106 Plymouth 1,002 $499 $498 137 31
107 Villa Park 5,951 $2,919 $491 130 23
108 Rancho Cucamonga 176,671 $86,031 $487 147 39
109 Eastvale 64,855 $31,424 $485 144 35
110 La Palma 15,948 $7,673 $481 104 -6
111 Calabasas 24,296 $11,271 $464 134 23
112 Oakley 41,742 $19,285 $462 117 5
113 Orinda 19,199 $8,724 $454 103 -10
114 Highland 54,761 $24,874 $454 109 -5
115 Grass Valley 13,041 $5,896 $452 77 -38
116 Saratoga 31,435 $13,693 $436 126 10
117 Palos Verdes Estates 13,519 $5,684 $420 91 -26
118 Clearlake 15,917 $6,605 $415 277 159
119 Ferndale 1,367 $558 $408 148 29
120 La Puente 40,686 $16,458 $405 131 11
121 Hesperia 94,829 $38,038 $401 128 7
122 Santa Clarita 216,589 $85,155 $393 119 -3
123 Vista 103,381 $38,299 $370 125 2
124 Diamond Bar 57,460 $21,271 $370 133 9
125 Lawndale 33,607 $12,280 $365 121 -4
126 Wheatland 3,497 $1,261 $361 135 9
127 San Clemente 65,543 $23,634 $361 142 15
128 Rancho Santa Margarita 49,329 $17,427 $353 156 28
129 Holtville 6,501 $2,293 $353 175 46
130 Canyon Lake 11,018 $3,802 $345 157 27
131 Clayton 11,431 $3,837 $336 81 -50
132 Brentwood 63,042 $21,024 $333 122 -10
133 La Canada Flintridge 20,683 $6,860 $332 87 -46
134 Maricopa 1,156 $383 $331 153 19
135 Stanton 39,470 $13,015 $330 150 15
136 Chino Hills 83,159 $26,547 $319 154 18
137 Shasta Lake 10,143 $3,094 $305 102 -35
138 Delano 53,276 $16,112 $302 159 21
139 Twentynine Palms 27,046 $8,104 $300 146 7
140 Gonzales 8,587 $2,546 $296 136 -4
141 Pico Rivera 64,260 $18,735 $292 139 -2
142 Fowler 6,241 $1,817 $291 185 43
143 St Helena 6,118 $1,740 $284 249 106
144 Menifee 91,902 $26,052 $283 193 49

25th Anniversary Look Back

The Moorlach Memo continues with Chapter 3. In this edition, I clearly predicted that the County of Orange would “be the major loser” due to Citron’s investment strategy.  For the first three segments, see:

Intro — Context — MOORLACH UPDATE — Constitutionally Flawed Legislation — November 5, 2019.

Chapter 1 — Introduction — MOORLACH UPDATE — Business, Electricity and Top 48 Cities — November 7, 2019

Chapter 2 — Hold to Maturity — MOORLACH UPDATE — 3P, Cities 49 to 96 and Holding to Maturity — November 12, 2019

WE DO NOT MARK TO MARKET

The “not marking to market” argument is valid if no one withdraws their money until the market values return to the exact levels when the participants deposited their funds.  This is theoretically improbable and statistically impossible. This argument is so shallow and dangerous, that to accept it is to commit financial suicide.

1.  Mutual funds that invest in stocks, bonds, and similar securities are required to mark to market at the net asset value of the investments.

Let me give another example.  You and I each invest $100 to purchase stocks worth $200.  After a month, you want your $100 back. Unfortunately, the market has gone down during these last thirty days and the stocks are now worth $150.  If we marked to market, you and I would both receive $75 each and close the account. If we don’t mark to market, then I would give you your $100 and I would be left with $50.  You get a premium at my expense. That’s not kosher.

2.  By marking to market a mutual fund does not go broke, but by not doing so it can.  If half of the invested funds were withdrawn from Citron’s portfolio, $3.7 billion, the remaining investors would have nothing left.  They will have lost everything at the expense of those who were at the front of the line. Publicly traded funds can not do this, somehow our County government can!  But the County will be the major loser! This is something that Cuyahoga County in Ohio is facing right now, as it is returning investments to its participants after its Treasurer followed the same strategy that Citron is using.

On October 13 the “Register” quoted Citron’s assurance that “nobody’s going to lose a penny of principal.”  But “The Wall Street Journal,” in its October 13 issue, reported that Cuyahoga County’s estimates of losses exceed $100 million.  How are Cleveland residents going to recoup that?

3. Under prudent circumstances, a County Treasurer should be managing a portfolio that operates like a money market mutual fund.  A money market mutual fund trades at a $1 net asset value. The values of the assets in the fund trade close to their purchase price because of the short-term nature.

Mr. Citron has created a long-term, highly leveraged bond mutual fund.  The only appropriate way to insure proper income allocations and principal distributions, from an equity standpoint and an accounting standpoint, is to mark to market.  Otherwise, someone gains at someone else’s expense. That’s why the Securities and Exchange Commission (SEC) requires marking to market by law.

4.  In the October 3rd issue of “The Bond Buyer,” Christopher J. Ailman, chief investment officer and manager for Sacramento County’s $1.8 billion short-term fixed-income portfolio, said investment pools would be managed differently if they had to meet SEC requirements for daily valuation of their worth.  “We’ll look horrible” if the pools were required to meet the mutual fund standard, he said adding that “we would manage the portfolios differently” if that were the case.

My contention, exactly.

Jerry Brown’s quixotic quest to save the world

By SUSAN SHELLEY

https://www.ocregister.com/2019/11/13/jerry-browns-quixotic-quest-to-save-the-world-susan-shelley/

https://www.sgvtribune.com/2019/11/13/jerry-browns-quixotic-quest-to-save-the-world-susan-shelley/

Former California Gov. Jerry Brown was in Washington a couple of weeks ago to testify to the House Oversight Committee that Republicans are “flat Earth” science deniers who don’t understand the “life-and-death” stakes of California’s effort to require automakers to increase the average mileage of the vehicles they sell from 37 miles per gallon in 2020 to about 50 miles per gallon in 2025.

“The blood is on your soul here,” he testified.

Brown blamed California’s worsening wildfires on climate change without mentioning that in 2016, he personally vetoed a bill that would have required the state to identify areas at high risk for wildfires, and would have required state utility regulators and forestry officials to develop enhanced plans to prevent fires caused by power lines and other utility equipment.

Senate Bill 1463 by state Sen. John Moorlach, R-Costa Mesa, had passed both the Senate and the Assembly unanimously.

Another thing Brown didn’t mention was a recent report by Consumer Watchdog titled, “Brown’s Dirty Hands,” which looks at the “close proximity” of his administration’s actions on behalf of energy companies to millions of dollars in political donations from those companies to the former governor’s campaigns and favored causes.

If Brown wants to chase down whose blood is on whose soul, he really should run for president. Or become an exorcist.

One is more likely than the other. When Brown left office in December 2018, the Sacramento Bee reported that he had $15 million in his campaign account that he might use to play in ballot measure campaigns.

But that’s a needlessly limited ambition for someone whose credits include preventing the Apocalypse by raising the price of gasoline.

Even if he doesn’t get the nomination, he can win the California primary and then use his leverage at the Democratic National Convention to force the party to embrace his goal of bringing California’s energy prices to the whole country.

Spreading the grief nationwide is one way to make California more competitive with all the states currently absorbing our growing tide of middle-income refugees, not to mention the high-income former Californians who refused to live up to their responsibility to pay all the state’s bills while being blamed for all the state’s problems.

Those ingrates.

Speaking to lawmakers on Capitol Hill, Brown prophesized, “The combustion car is going the way of the dodo bird, and you’ve got to either get with it or get out of the way.”

People who were in school in the 1970s might remember a similar prophecy, delivered with similar scowling certainty, that the United States was going to convert to the metric system, like it or not, because the rest of the world was already on it.

Here’s a brief history of how that worked out.

It didn’t.

Americans have a history of not caring at all what the rest of the world is doing. It’s in our nature to evaluate the facts in front of us and make individual decisions. When enough people individually conclude that something makes sense, it happens. And if they don’t, it doesn’t happen.

This much freedom is enormously frustrating to the kind of people who think government should do all the research, announce the findings from “the science,” and then enforce its decisions on the population.

Take electric cars, for instance. They mostly run on fossil fuels mixed with your tax dollars, with the additive of higher electricity rates to subsidize the installation of charging infrastructure.

One purpose of ratcheting up the mileage requirements, also known as the Corporate Average Fuel Economy (CAFE) standards, is to provide a market for electric vehicle “credits.” Companies that sell muscle cars and pick-up trucks can meet their mileage obligation by purchasing credits from companies that exceed the requirements for fuel economy because they build electric cars. Tesla may earn more from selling credits than cars.

No matter how much the government pushes and charges — which coincidentally is what you may have to do with an electric car to get where you’re going — the vast majority of car buyers continue to choose “combustion” as their preferred mode of vehicle power.

We’ll keep watch on that dodo bird prediction, though. If muscle cars are endangered, they might qualify for federal and state protection.

Susan Shelley is an editorial writer and columnist for the Southern California News Group. Susan@SusanShelley.com. Twitter: @Susan_Shelley

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MOORLACH UPDATE — 3P, Cities 49 to 96 and Holding to Maturity — November 12, 2019

Public-Private Partnership Intervention

The Log has a mystery writer of letters-to-the-editor who referred to blocking the sale of the toll roads; that is something I did 20 years ago (not 10 as the writer stated in his letter).

It was an interesting chapter where I derailed a highly questionable transaction that would have enriched the developers of the 91 Express Lanes unbeknownst to most other people all because of a well-placed question by a reporter to me.

The story is a long one, but a good place to get a synopsis is found at MOORLACH UPDATE — Daily Pilot — December 15, 2009.  In short, elected leaders have got to pay attention to issues regarding public rights of way so that neither the government nor public-private partnerships get away with abusing the system. That’s what I have spent 25 years working hard to do.

The link provides a piece by LA Times columnist Dana Parsons, “This Time I’ll Be Listening, Mr. Moorlach,” that evaluates my actions and results.  Consequently, the mystery writer is inferring that someone may not be around when a problematic private-public partnership transaction needs to be better scrutinized in the future.  At least one that this letter writer opposes. In the opening paragraphs, Parsons even refers to my warnings of the bankruptcy:

If there’s a patron saint for guilty columnists, it would have to be Orange County treasurer John Moorlach.

At least, he’d be mine.

That’s because my biggest regret in nine years at this post was not listening to the lanky Moorlach when he ran for treasurer in 1994 and warned against incumbent Robert Citron’s investment strategies.

What galls me is that I had actually planned a column on the Citron-Moorlach campaign, even though it was just going to be one chastising Citron for being so haughty in answering Moorlach’s challenges. But I put it off and put it off and it never got done.

How was I to know Moorlach really was on to something?

That’s ancient history.

Moorlach has kept kind of a low profile since taking over in 1995, but he’s gotten a lot louder lately.

And I’m all ears.

Cities 49 to 96

The next group of cities on my list of cities’ financial positions includes four from Orange County, Laguna Niguel (60), Dana Point (83), Lake Forest (87), and Laguna Woods (94).  Two of the cities are in the 37th Senate District.

The distinguishing characteristic is that all four are contract cities that outsource their public safety functions to the Orange County Sheriff’s Department (County of Orange) and the Orange County Fire Authority (OCFA).  Therefore, the pension liabilities are reflected on the balance sheets of the County of Orange and OCFA. However, do not think that there is no cost or long-term liability, it just reveals itself at other places on the cities’ ledgers.

Rank City Pop. UNP 2018 (Thou-sands) UNP/ Capita 2017 Rank Rank Change
49 East Palo Alto 30,917 $40,774 $1,319 58 9
50 Biggs 1,913 $2,397 $1,253 73 23
51 Arcata 18,398 $22,999 $1,250 53 2
52 Portola 2,161 $2,511 $1,162 47 -5
53 Avenal 13,053 $15,121 $1,158 29 -24
54 Woodlake 7,786 $8,824 $1,133 57 3
55 Lafayette 25,655 $29,007 $1,131 60 5
56 Buellton 5,291 $5,824 $1,101 71 15
57 Tulelake 977 $1,032 $1,056 54 -3
58 Rancho Palos Verdes 42,723 $44,168 $1,034 64 6
59 Signal Hill 11,749 $12,128 $1,032 67 8
60 Laguna Niguel 65,377 $67,450 $1,032 56 -4
61 La Mirada 49,590 $51,143 $1,031 37 -24
62 Camarillo 68,741 $68,801 $1,001 63 1
63 Williams 5,465 $5,201 $952 66 3
64 La Habra Heights 5,454 $5,164 $947 68 4
65 Hercules 26,317 $24,579 $934 52 -13
66 Hawaiian Gardens 14,666 $13,552 $924 48 -18
67 West Sacramento 54,163 $49,603 $916 248 181
68 Rio Dell 3,348 $2,988 $892 113 45
69 San Carlos 29,897 $26,567 $889 90 21
70 Woodside 5,623 $4,784 $851 83 13
71 Cupertino 60,091 $50,458 $840 69 -2
72 Poway 50,207 $41,227 $821 72 0
73 Parlier 15,493 $12,550 $810 80 7
74 Tiburon 9,648 $7,709 $799 61 -13
75 Thousand Oaks 130,196 $104,018 $799 70 -5
76 Loyalton 757 $596 $787 124 48
77 Calipatria 7,488 $5,765 $770 196 119
78 Tulare 65,982 $50,783 $770 84 6
79 Live Oak 8,781 $6,723 $766 96 17
80 Loomis 6,824 $5,191 $761 85 5
81 Stockton 315,103 $238,421 $757 99 18
82 San Joaquin 4,119 $3,022 $734 78 -4
83 Dana Point 34,071 $24,965 $733 89 6
84 Colfax 2,150 $1,549 $720 123 39
85 Portola Valley 4,767 $3,411 $716 75 -10
86 Rio Vista 9,188 $6,457 $703 101 15
87 Lake Forest 84,845 $59,234 $698 86 -1
88 Los Altos 31,361 $20,429 $651 76 -12
89 San Dimas 34,507 $22,371 $648 82 -7
90 Walnut 30,457 $19,113 $628 141 51
91 Yucaipa 54,651 $33,975 $622 79 -12
92 Menlo Park 35,268 $21,915 $621 92 0
93 Rancho Cordova 74,210 $45,023 $607 106 13
94 Laguna Woods 16,597 $9,937 $599 100 6
95 Del Mar 4,322 $2,550 $590 318 223
96 Santa Monica 92,416 $54,401 $589 170 74


In 1994 I tried to wake up the county with one last editorial submission that, regrettably, was not published.  I’ve pulled it out of the archives as we reflect on the 25th anniversary since the County of Orange filed for Chapter 9 bankruptcy.  For the introduction and the first chapter, see
MOORLACH UPDATE — Constitutionally Flawed Legislation — November 5, 2019  and MOORLACH UPDATE — Business, Electricity and Top 48 Cities — November 7, 2019, respectively.  

25th Anniversary Look Back

Here is Chapter 2, where I lay out what would happen in the near future to the County’s investment scheme as it was a major bet, an epithet that would be applied to Mr. Citron’s strategy in the years that followed:

HOLD TO MATURITY

The “hold to maturity” argument would be valid if our Treasurer were managing only his personal funds.  He’s not.

    1. The County invests the reserves and the daily “float” for itself. Should the reserves be needed for an anticipated or unanticipated project, the respective investments would have to be sold to meet the liquidity requirements.

The major “fly in the ointment” is that the majority of the bonds and derivatives purchased have a maturity of four years or longer.  If you “hold to maturity” you may have to wait until 1998 to get your money.   

    1. The County also invests for over 180 municipalities in and around the County.  Orange County only has about 87 municipalities and not all of them invest in the County’s “risky” portfolio.  That means we have over 100 municipalities outside of the County that were seduced into the portfolio by Citron’s higher returns.

Citron has no control over outside investors.  If they went in for higher yields, then they will leave if they can obtain higher yields elsewhere.  Because Citron’s portfolio is designed to produce a higher yield as rates decline, it is highly probable that certain investors will seek an investment opportunity where yields are increasing as interest rates increase.  This will create a significant liquidity problem.

    1. The portfolio is the collateral for the lenders of the $14 billion.  Their equity has decreased by fifty percent. They need to protect their interests as well. Accordingly, they have already demanded over $300 million in additional collateral.

If interest rates continue to rise and, inversely, bond values continue to decline another 17 percent, then the portfolio has value equal to its debt.  Any observant lender would step in and demand all of the collateral. If this happens, Citron’s participants will have lost all $7.4 billion of their investments in the blink of an eye.

Again, Citron has no control over the direction of interest rates or the resolve of his lenders.  His major bet on interest rates declining will have been lost and all of the funds for the some 180 municipalities will have been history.

Letters/Online Comments

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https://www.thelog.com/opinion/letters-online-comments-20/

RE: “Desalination: Poseidon still trying to plant its trident into Huntington Beach” (Oct. 4-17)
Yes, drought inevitable. Yes, Poseidon is attempting to take advantage of the discounted power from AES as we were duped into exempting them from natural gas taxes during the Enron debacle. Every other entity in HB pays the tax. Imagine how much revenue the city loses now and how much it will sacrifice as power for this energy intensive process is fed to Poseidon without benefit (in water or tax revenue) to the municipality most impacted by infrastructure.

That incredible scenario is exemplary of the private-public partnerships where public always seems to be outmaneuvered by appropriately profit seeking capitalists. No desire here to staunch capitalists – just concern that taxpayers always get the bill. That’s not hard earned profit– its arbitrage – leveraging taxpayers for risk free returns.

Ok, set those dynamics aside. Given the risk free nature of the project (Poseidon can, after all, simply go bankrupt if we refuse to rescue it from purchasing agreements that do not yield profitability) and the demands of a growing population that guarantees our water districts will maintain the output (reclamation could do the same thing but that’s a whole other issue) why would the additional expense and far lesser environmental impacts of a subsurface system like that proposed for South County desalination project be a non-starter for Poseidon? See points above and sense a much shorter-term perspective on this public-private “partnership” from the private side. I’m just an avid news reader with a memory. It was only 10 years ago that Moorlach and others put the kibosh on the contrived sale of toll roads on public lands from private investors to a non-profit entity– presumably because profits were not coming fast enough for the private investors. Will Moorlach and his kind be around to shut down similar maneuvers in the future? It will likely be necessary. A technologically feasible sub-sand surface water sourcing system will at least protect local HB beaches while the finance battles rage on. Oh, yeah, what to do with the output from desalination? Reclamation has that solved with current waste stream output. Reclamation is – by demand and billing – scalable, in place, environmentally proven and completely publicly owned, operated and financed with zero risk that taxpayers will get duped by impatient but God-bless-America-we-definitively-need-’em profit oriented capitalists. Let’s just recognize they need to play in separate sandboxes…or beaches!

Mc

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MOORLACH UPDATE — Business, Electricity and Top 48 Cities — November 7, 2019

Voting Record is Pro-Business

The OC Register presented the results of the California Chamber of Commerce’s rankings for legislative votes.  I know how hard it is to not only promote free markets, but also slow down bad legislation that hurts business in this legislature.  The elephant in the room, AB 5, was not included and I’m sure will be back in various forms next year. Hopefully this serves as a wake up call to our business community if it wants to turn this state around and improve the business climate.

Special Session?

I don’t believe I’ve seen an article where all 120 state legislators were contacted and asked to respond to an inquiry, but KRON Channel 4 did it.  Attending a Special Session works for me. I’m just not sure it will be productive.

The majority party doesn’t plan far into the future and has passed shortsighted legislation for decades. It is guilty of triggering the rule of unintended consequences and then reacting.  We tried to harden utility assets in wildfire zones, but the majority party, through Governor Brown, vetoed our well-intentioned effort that could have saved lives (see MOORLACH UPDATE — SB 1463 And The Facts — November 19, 2018 and MOORLACH UPDATE — SB 1463 Epilogue — October 4, 2018).  But, likely in response to this media request, the Senate leadership offered an informational hearing in the Senate Energy, Uitilities and Communications Committee for November 18th, for which I serve as vice chair, and will be attending.

Top 48 California Cities

Since we have not received the Comprehensive Annual Financial Reports (CAFRs) for some 20 cities, I’ve decided to extrapolate their possible Unrestricted Net Positions.  Since they are relatively low populated cities, should they ever complete their annual audits and publish the results, we’ll probably find I was charitably conservative in my calculations.

The top 48 cities found only 6 cities moving up into this group.  The one city that has not provided its CAFR is Etna. It is surprising the city of Emeryville is in the top grouping, as Assemblyman Mark Stone, D – Scotts Valley, authored AB 618 to allow this city to exceed the 2% threshold to increase a city’s sales and use tax.  Asking for a higher sales tax is a way of telegraphing fiscal distress. The Governor vetoed this bill.

It is nice to see four Orange County cities in this group, Tustin (32), Irvine (35), Laguna Beach (39) and Cypress (41).  The first three cities are in my 37th Senate District and, while I served as Orange County Supervisor for the Second Supervisorial District, I was the Cypress Chamber of Commerce’s 2014 Man of the Year.

The key takeaway?  You can be a major city and have a positive Unrestricted Net Position.

Rank City Pop. UNP 2018 (Thou-sands) UNP/ Capita 2017 Rank Rank Change
1 Industry 437 $226,379 $518,030 1 0
2 Sand City 394 $14,935 $37,906 2 0
3 Irwindale 1,450 $31,221 $21,532 3 0
4 Indian Wells 5,574 $61,885 $11,102 4 0
5 Colma 1,501 $12,890 $8,588 5 0
6 Dorris 966 $4,534 $4,694 7 1
7 Coronado 21,683 $99,784 $4,602 10 3
8 Bradbury 1,069 $4,707 $4,403 19 11
9 Trinidad 340 $1,465 $4,309 13 4
10 Rancho Mirage 18,738 $72,154 $3,851 11 1
11 Hidden Hills 1,892 $7,282 $3,849 14 3
12 Beverly Hills 34,504 $121,592 $3,524 6 -6
13 Shafter 19,271 $65,837 $3,416 12 -1
14 La Quinta 41,204 $130,892 $3,177 18 4
15 Emeryville 11,994 $36,360 $3,032 8 -7
16 Malibu 12,957 $35,503 $2,740 30 14
17 Rolling Hills 1,939 $5,072 $2,616 22 5
18 Yountville 2,874 $7,515 $2,615 17 -1
19 San Juan Bautista 1,873 $4,860 $2,595 24 5
20 Truckee 16,681 $43,205 $2,590 16 -4
21 Foster City 33,490 $82,200 $2,454 21 0
22 Pismo Beach 8,233 $19,503 $2,369 51 29
23 West Hollywood 36,723 $86,634 $2,359 23 0
24 Cerritos 50,058 $115,757 $2,312 20 -4
25 Carlsbad 114,622 $262,023 $2,286 26 1
26 Dublin 63,241 $141,009 $2,230 28 2
27 Ross 2,533 $5,558 $2,194 44 17
28 Lathrop 24,268 $52,397 $2,159 27 -1
29 Point Arena 448 $893 $1,993 31 2
30 Needles 5,177 $10,095 $1,950 403 373
31 Etna 744 $1,433 $1,926 9 -22
32 Tustin 82,344 $151,119 $1,835 34 2
33 Agoura Hills 20,878 $36,536 $1,750 35 2
34 Morgan Hill 44,513 $73,638 $1,654 32 -2
35 Irvine 276,176 $442,116 $1,601 41 6
36 Palm Desert 52,769 $83,055 $1,574 36 0
37 Fortuna 12,042 $18,855 $1,566 184 147
38 Solvang 5,771 $9,010 $1,561 42 4
39 Laguna Beach 23,309 $35,893 $1,540 55 16
40 Los Altos Hills 8,568 $13,052 $1,523 43 3
41 Cypress 49,978 $75,804 $1,517 33 -8
42 Moorpark 37,044 $55,571 $1,500 93 51
43 Westlake Village 8,358 $12,456 $1,490 39 -4
44 San Pablo 31,593 $46,422 $1,469 50 6
45 Danville 44,396 $64,907 $1,462 38 -7
46 Montague 1,428 $1,986 $1,391 49 3
47 Half Moon Bay 12,639 $17,011 $1,346 25 -22
48 Monte Sereno 3,630 $4,839 $1,333 45 -3

25th Anniversary Look Back

For the context of the first of ten chapters of my attempt to wake up the OC Register, see MOORLACH UPDATE — Constitutionally Flawed Legislation — November 5, 2019.

INTRODUCTION

As interest rates have continued to rise and further Federal Reserve Board increases are imminent, I must reiterate the concerns I raised in my campaign for Orange County Treasurer-Tax Collector.  Perhaps I protesteth too much, but if you follow the financial markets, you know the shape the bond market is in.  Inflation has been rearing its ugly head and the Fed is reacting.

Fiscal conservatives carefully watch government taxing and spending.  They must also watch its investing.  We have many elected officials that invest our tax dollars like financial maniacs.  Their investments are highly leveraged and heavily invested in super speculative derivatives.  And many are paying the price around the country.  Since it may happen here, you should be forewarned.

Let me diagram Orange County’s recent invested position in very round numbers:

Invested funds . . . . . . . . . . . . . . . . . . . . . . . $  7.4 billion

Borrowed funds . . . . . . . . . . . . . . . . . . . . . .   14.6 billion

     Total portfolio . . . . . . . . . . . . . . . . . . . . . .$22.0 billion

The debt, or margin, is achieved by utilizing reverse repurchase agreements.  The portfolio is invested in bonds and derivatives.  Both markets have taken a bath this year.  Let’s assume the value of the total portfolio has gone down 17 percent.  What do the investors really own?

Value of total portfolio . . . . . . . . . . . . . . . . . .$18.3 billion 

Less:  Borrowed funds . . . . . . . . . . . . . . . . . . 14.6 billion

     Value of invested funds . . . . . . . . . . . . . . $  3.7 billion

Translation:  The investors, which are municipalities (perhaps your school district or your city), have lost half of the value of their invested funds!

Not to fret, says our County Treasurer, Robert L. “Bob” Citron.  Using shallow euphemisms, he calmly informs us that he “holds to maturity” and “does not have to mark to market.”  It sounds like good news.  It’s not.  That’s why they’re sweating bullets at the County Halls of Administration.  And they should be.

OC Political Roundup

By BROOKE STAGGS

https://www.ocregister.com/2019/11/07/political-roundup-vp-mike-pence-to-raise-money-in-orange-county-calchamber-ranks-legislators/

Voting records ranked

The California Chamber of Commerce gave perfect scores for 2019 to three state legislators who represent Orange County, liking the way they voted on issues that the chamber says could help or hurt business.

That included votes against a still-active bill that would ban businesses from printing paper receipts unless requested, and votes in favor of a bill vetoed by Gov. Gavin Newsom that would have OK’d carbon credits for renewable natural gas transported via traditional pipelines.

Notably, the chamber’s scorecard didn’t include Assembly Bill 5, which limits the use of independent contractors, and Assembly Bill 1482, a statewide rent control measure. CalChamber didn’t take a position on the bills as they evolved near the end of the session.

Scores predictably fell along party lines, with Republicans most likely to side with CalChamber in shooting down bills that might increase regulations for businesses, while Democrats favored many of those same bills due to their predicted impacts on the environment or workers rights.

State Sens. John Moorlach, R-Costa Mesa, and Pat Bates, R-Laguna Niguel, were among nine senators — all Republicans — who voted with CalChamber’s position on 18 out of 18 senate bills this year.

“The fight to protect our economy takes place every year in the Legislature,” Bates said. “I look forward to continuing that fight next year.”

State Assemblyman Phillip Chen, R-Brea, also received a perfect score from CalChamber, joining six other assembly members — again, all Republicans — who voted in line with the chamber’s position on 20 out of 20 earmarked assembly bills.

Also in CalChamber’s top category for backing its stance on bills at least 80 percent of the time were Sen. Ling Ling Chang, R-Diamond Bar, (16-2) and Assemblymen Bill Brough, R-Dana Point (19-0); Steven Choi, R-Irvine (19-1); Tyler Diep, R-Westminster (17-2); and Tom Daly, D-Anaheim (16-4). Daly was the only local Democrat and one of just six in the state to make CalChamber’s top category.

In the second tier were Assemblywomen Sharon Quirk-Silva, D-Fullerton, (14-6) and Cottie Petrie-Norris, D-Laguna Beach (12-8), who voted with CalChamber between 60% and 79% of the time.

Sen. Bob Archuleta, D-Pico Rivera, was in CalChamber’s third tier, voting with the organization half of the time. And Sen. Tom Umberg, D-Santa Ana, was with 19 other Democratic state senators in CalChamber’s fourth tier.

“Where there’s been a tension between environmental concerns and others, I have tended to go with the environmental crowd,” said Umberg, who voted in line with the chamber on six out of 18 bills.

While Umberg said he respects CalChamber, he said he doesn’t take rankings from any interest group much to heart.

“I want to consider each measure on its individual merits versus what’s going to happen on a particular scorecard.”

Does your lawmaker support a special session to discuss PG&E power shutoffs, wildfires?

by: Ashley Zavala

https://www.kron4.com/news/california/does-your-lawmaker-support-a-special-session-to-discuss-pge-power-shutoffs-wildfires/

With wildfire season underway and the possibility for more widespread power shutoffs, we’re asking lawmakers if they think a special legislative session is needed on these issues?

There are still two months left before lawmakers come back to the Capitol to start passing new laws.

Governor Gavin Newsom has the power to call back lawmakers for a special legislative session to pass policy to address urgent issues, but he’s said multiple times recently he doesn’t think it’s necessary now with PG&E under the microscope of regulators and a strike team.

“To the extent more is needed, I will continue to pursue that,” Newsom said.

The specific question we posed to lawmakers was would you be supportive of a special session on issues seen now on public safety power shutoffs, investor-owned utilities, and fires?

In the assembly, more than half of the members either refused to comment or respond.

28 members total said they would support one, including Assembly Member James Gallagher, who represents part of an area destroyed by last year’s deadly Camp Fire.

“It should take thought, you have to think through these issues, we could be doing that right now, we don’t necessarily have to wait until January,” Gallagher said.

The situation was similar in the Senate where more than half did not comment or respond while 15 members said they would support a special session.

Two senators flat out said they would not support one right now, including Bay Area lawmaker Jerry Hill.

“We need information first, you don’t bring legislators together to try to define the problems to work out solutions. Nothing worse than having a bunch of legislators coming together with no defined role around the holidays to come up with a solution, it would not be the best result, I can guarantee it,” Hill said.

The leaders of both chambers say they’re in constant contact with the governor on the issues.

A committee of senators will gather Nov. 18 for an oversight hearing on power shutoffs.

See how your representative responded to our poll:

No response = We reached out and they didn’t respond
No comment = We reached out and this was their response

Assembly (in alphabetical order)

DISTRICT 04 (D) Aguiar-Curry, Cecilia M. -Other: Statement: “I do not know if a special session of the legislature is the correct way to address the complex and urgent issues around wildfires and public safety power shutoffs. What I do know is that they threaten the health and safety of my constituents as well as impose huge economic hardships on working families, low-income residents, seniors, and small businesses. This cannot continue! I’m less concerned with what venue the Governor and Legislative leadership choose to address these widespread blackouts than I am about getting to the bottom of how much of this is absolutely necessary to protect the safety of the public, and how we can hold accountable anyone who would use them to protect corporate profit.”

31 (D) Arambula, Joaquin -No response

16 (D) Bauer-Kahan, Rebecca -Yes

24 (D) Berman, Marc -Yes

05 (R) Bigelow, Frank -No response

50 (D) Bloom, Richard -No

76 (D) Boerner Horvath, Tasha – Yes

18 (D) Bonta, Rob – No comment

73 (R) Brough, William P. -Yes

62 (D) Burke, Autumn R. – No comment

57 (D) Calderon, Ian C. – No comment

51 (D) Carrillo, Wendy -No response

60 (D) Cervantes, Sabrina -No response

49 (D) Chau, Ed – Yes: “If a special session is held, I am more than happy to work with the Governor and my colleagues.”

55 (R) Chen, Phillip – No response

17 (D) Chiu, David – Yes

08 (D) Cooley, Ken -No response

09 (D) Cooper, Jim -Unable to be reached

35 (R) Cunningham, Jordan – No response

69 (D) Daly, Tom -No comment

72 (R) Diep, Tyler – No response

13 (D) Eggman, Susan Talamantes – Yes

12 (R) Flora, Heath – Yes: Statement: “If the state is serious about working with the Feds, the environmentalists, and the business community on better managing California’s forests then I’m all-in for a special session. If it’s the same dog and pony show about who pays for wildfire damages, then it’ll be a waste of everyone’s time. The state’s been standing on a 33 million-acre tinder box trying to discourage people from lighting matches next to it so maybe it’s time to take a look at what’s under our feet.”

34 (R) Fong, Vince – Yes

11 (D) Frazier, Jim – No comment

43 (D) Friedman, Laura – Yes

45 (D) Gabriel, Jesse – No response

03 (R) Gallagher, James – Yes

58 (D) Garcia, Cristina – No comment

56 (D) Garcia, Eduardo – No comment

64 (D) Gipson, Mike A. – No response

78 (D) Gloria, Todd -No comment

80 (D) Gonzalez, Lorena -No response

21 (D) Gray, Adam C. -No response

14 (D) Grayson, Timothy S. -No comment

41 (D) Holden, Chris R. -No response

44 (D) Irwin, Jacqui – No response

59 (D) Jones-Sawyer, Sr., Reginald -No response

2196 27 (D) Kalra, Ash -Yes

54 (D) Kamlager, Sydney -Yes

06 (R) Kiley, Kevin -No response

36 (R) Lackey, Tom -Yes

10 (D) Levine, Marc -Yes

37 (D) Limón, Monique -No comment

28 (D) Low, Evan -Yes

77 (D) Maienschein, Brian -No response

26 (R) Mathis, Devon J. -Yes

42 (R) Mayes, Chad -Other, statement: “Special Sessions succeed when there is a clear, defined policy solution proposed in bill format. Special Sessions fail when there is not a clear defined policy to debate and oftentimes results in quick, not well thought out legislation that may give us unintended consequences and make the problem worse.”

07 (D) McCarty, Kevin -No comment

61 (D) Medina, Jose -No response

67 (R) Melendez, Melissa – No response

66 (D) Muratsuchi, Al -No comment

46 (D) Nazarian, Adrin -No response

33 (R) Obernolte, Jay -No response

70 (D) O’Donnell, Patrick -No comment

23 (R) Patterson, Jim -Yes

74 (D) Petrie-Norris, Cottie -Yes

20 (D) Quirk, Bill – No

65 (D) Quirk-Silva, Sharon – Yes, “I would be in favor of a special session to address the concerns of the PG&E power shutoffs, the impact of the recent fires, and other legislative matters if found necessary. I feel that most of my colleagues would agree that if a special session was proposed, they would agree.”

40 (D) Ramos, James C. -No comment

63 (D) Rendon, Anthony -Speaker-Statement: “I’ve been in regular contact with Governor Newsom, who is the only one with the authority to call a special session. I’m grateful to Assemblymember Chris Holden, chair of the Utilities and Energy Committee, for joining me in discussing the current wildfire crisis with the Governor.”

47 (D) Reyes, Eloise Gómez – No comment

39 (D) Rivas, Luz M. -No comment

30 (D) Rivas, Robert -Yes, “The Governor is already taking steps needed to develop immediate solutions and ensure that these issues will be addressed when the legislature reconvenes in January. However, one benefit of having a special session is that bills become operative within 90 days, even absent an urgency clause. Special session or not, we must, and I’m confident the legislature will work diligently to address this crisis.”

52 (D) Rodriguez, Freddie -No response

48 (D) Rubio, Blanca E. -Yes

32 (D) Salas, Jr., Rudy -Yes

53 (D) Santiago, Miguel -No response

38 (D) Smith, Christy -Yes

29 (D) Stone, Mark -No response

19 (D) Ting, Philip Y. -No response

71 (R) Voepel, Randy -Yes

75 (R) Waldron, Marie -Yes, “Under a decade of Democratic leadership, our wildfires and utility markets have only gotten worse. We need action – if that means calling a special session, that’s what we should do.”

79 (D) Weber, Shirley N. -Unable to be reached

15 (D) Wicks, Buffy -Yes

02 (D) Wood, Jim -Other, statement: “The overwhelming and numerous impacts of these widespread PG&E power shutoffs, along with the loss and stress people are feeling after another devastating wildfire – apparently caused once again by PG&E equipment – only emphasizes the critical need for solutions. I have met hundreds of people who have gone days without power, not just losing the food in their refrigerators, but unable to work and get paid, small businesses that have lost thousands in income, schools shut down, parents scrambling for childcare, and our vulnerable seniors whose care has been disrupted. It seems to me that PG&E is only interested in protecting itself and recent comments by its CEO have proven him to be tone-deaf to the real-life impacts PG&E’s actions have had on the individuals and families who pay their salaries. Whether or not a special session is called, we are already doing the work by listening to our constituents, sharing thoughts with our colleagues and hearing from experts so that our solutions will acknowledge the urgency of these issues.”

Senate (in alphabetical order)

26 (D) Allen, Benjamin -No response

32 (D) Archuleta, Bob -No response

39 (D) Atkins, Toni -Pro Tem- Statement: “The Senate will be holding a hearing on Nov. 18 to discuss California’s response to wildfires and utility public safety power shutoffs. We will continue to work closely with the Administration to properly respond to this crisis.”

36 (R) Bates, Patricia -Yes

15 (D) Beall, Jim -No comment

08 (D) Borgeas, Andreas -Yes

35 (D) Bradford, Steven -Yes

12 (D) Caballero, Anna -No comment

29 (R) Chang, Ling Ling -Yes: “Blackouts and fires caused by bad power lines are unacceptable. The legislature and Governor need to address this problem as soon as humanly possible. I support the call for a special session as soon as we develop solutions to a problem that has take a decade to create.”

01 (R) Dahle, Brian -Yes, has publicly urged the Governor to call a special session

03 (D) Dodd, Bill -Yes

24 (D) Durazo, Maria Elena – No response

05 (D) Galgiani, Cathleen -No comment

07 (D) Glazer, Steven -Yes “If there is a proposal to enact immediate health and safety protections from fires and utility breakdowns and it requires a special session of the legislature to put it into effect, I would support such a session.”

33 (D) Gonzalez, Lena-Yes

16 (R) Grove, Shannon – Yes: “I support a special session because the Legislature needs to take immediate action and provide real solutions. Instead of diverting money to expensive renewable energy contracts, we need to focus on real priorities such as mitigating and preventing wildfires, hardening and providing a secure energy grid. Over the years, Senate Republicans have introduced commonsense legislation to reduce the risk of catastrophic wildfires, invest in vegetation and forest management, and secure a reliable energy grid. Unfortunately, these measures have been ignored by the Democrats. This is the 21st Century, recurring power outages and destructive wildfires cannot be the new normal. California deserves better,” said Senate Republican Leader Shannon Grove (R-Bakersfield).

18 (D) Hertzberg, Robert -No comment

13 (D) Hill, Jerry -No

40 (D) Hueso, Ben -Other- Supports having November 18th oversight hearing

14 (D) Hurtado, Melissa -No comment

19 (D) Jackson, Hannah-Beth – No response

38 (R) Jones, Brian – Yes

20 (D) Leyva, Connie – Referred us to Governor’s office

02 (D) McGuire, Mike – No response

30 (D) Mitchell, Holly -No comment

17 (D) Monning, Bill– No comment

37 (R) Moorlach, John -Yes, “I would attend a special session because my constituents deserve reliable power and protection from wildfires. The current legislature rejected common-sense solutions to this issue when I authored SB 1463, so I’m not confident a new solution would be crafted quickly.”

23 (R) Morrell, Mike -Yes “I would support a special session as long as it focuses on the issues surrounding utility power shutoffs, wildfires, and homeowners insurance policy cancellations. It cannot become a free-for-all for legislative Democrats to create laws on unrelated topics outside the normal policymaking process.”

04 (R) Nielsen, Jim -Yes

06 (D) Pan, Richard– No comment

25 (D) Portantino, Anthony -No response

31 (D) Roth, Richard-No response

22 (D) Rubio, Susan -Yes

09 (D) Skinner, Nancy -No response

27 (D) Stern, Howard -Other-“As a member of the Senate EU&C Committee, Senator Stern will be taking part in the November 18th hearing on the PSPS events. As for what happens next, the Senator looks forward to working with the Senate Pro Tempore and the Administration.”

34 (D) Umberg, Thomas -Other- Will wait to see what happens with oversight hearing

10 (D) Wieckowski, Bob-No

11 (D) Wiener, Scott -No comment

21 (D) Wilk, Scott – Yes, publicly urged Newsom to call special session

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MOORLACH UPDATE — Constitutionally Flawed Legislation — November 5, 2019

CalMatters brings up so many memories of Floor debates.  Topics like the use of video cameras and forcing crisis pregnancy centers to post a sign that abortions are available.  Reporters can use hidden cameras, but others doing investigations cannot? Do Chevrolet dealers have to inform customers that there is a Ford dealer down the street?

I warned that Assemblyman David Chiu’s bill would fail the constitutionality test in court.  It cost taxpayers more than $870,000 for the Attorney General to unsuccessfully defend his bill, in addition to the $2.1 million paid to the successful litigants (see MOORLACH UPDATE — Sacred Votes — May 26, 2019).  The Legislature continues to pursue bills that will meet a similar fate.

Crying about some perceived windfall by the plaintiffs just doesn’t hold water.  As someone who used to bill hourly for my time as a Certified Public Accountant, paying attorney fees is just compensation for the time invested.  If this bothers you, good. Don’t pass and sign legislation that comes with an automatic court case.

As for the selling of body parts, it occurred, resulting in a $7.8 million settlement by the offenders to the Orange County District Attorney two years ago..

25th Anniversary Look Back

It was the calm before the storm, but I had to vent.  So I wrote a rather lengthy editorial submission and faxed it to editorial writer Harold Johnson of the OC Register on October 15, 1994.  The subject title on the transmittal cover sheet was “Financial Maniacs” and here’s what I wrote:

In the genre of “you just don’t realize how bad it really is” comes this lengthy response. Give me your input.  Is this a Sunday editorial? Should I contact “California Political Review”? Do you have suggestions for editing it down in size?  Should we leave it alone (after all, self-fulfilling prophecies aren’t always fun)? Call me at XXX-1040 as these issues will not go away.

I don’t believe I ever heard back from the OC Register‘s editorial board in the weeks that followed.

However, on December 7th, the day after Orange County filed for Chapter 9 bankruptcy, I received a call from Commentary Editor Ken Grubbs, asking me if I would like to submit my thoughts.  I said that I had already prepared a piece almost two months prior. He asked me to fax it to him. So I used the same transmittal cover sheet, changed the date and fax number and added Ken’s name.

It was the lead op-ed, top-of-the-fold, for that Sunday’s Commentary section on December 11th.  I had recommended the title, “Oust the Financial Maniacs,” the OC Register‘s choice was “The Moorlach memo:  a predictable crash.” They also provided this preamble for the piece:

Last June, Costa Mesa accountant John Moorlach, in his losing campaign to unseat then County Treasurer Robert L. Citron, warned that Mr. Citron’s investment practices were risky.  Shortly after the election, still concerned about the county investment strategy, Mr. Moorlach wrote an analysis of the situation.  That analysis — revised in October before the county admitted its investment pool had dropped $1.5 billion in value — appears below.

My piece had 10 sections, so I may provide one section every other day during the month of November.  For the previous LOOK BACK, see MOORLACH UPDATE — Scary Departures — October 31, 2019.

City CAFR Rankings – June 30, 2018

I hope to accompany the Moorlach Memo LOOK BACKS with 10 sections of this year’s rankings of California’s 482 Unrestricted Net Positions per capita for the year ended June 30, 2018.

We are still waiting for the comprehensive annual financial reports (CAFRs) from some 20 cities.  It’s hard to believe that some cities are this delayed in fulfilling their reporting obligation to their residents.I pointed out last year that the city of Compton (#412) had not prepared a CAFR since 2013 (see MOORLACH UPDATE — City CAFR Rankings – Vol. 2 — February 8, 2018).  No wonder Compton was ranked the worst for cities facing fiscal challenges in the recently released list by the California State Auditor, after reviewing the same data for all of California’s cities for the year ended June 30, 2017 (see https://www.auditor.ca.gov/bsa/cities_risk_index).

How an abortion rights law ended up bankrolling anti-abortion forces in CA

BY DAN MORAIN Dan Morain

https://calmatters.org/politics/2019/11/abortion-law-california-settlement-nifla-becerra-daleiden-sekulow/

IN SUMMARY

California lawmakers knew the reproductive FACT Act had constitutional issues, but passed it anyway. Now that the U.S. Supreme Court has overturned it, legal penalties have been a windfall for attorneys fighting abortion here and nationally.

In 2015, California Democrats passed a state law aimed at ensuring pregnant women get a complete picture of their options, including the right to an abortion. Little did they know that, four years later, their effort would yield a $2 million windfall for conservative legal campaigns to restrict abortion and LGBTQ rights.

In an irony for the annals of California’s resistance, court documents show that reproductive rights advocates have paid a steep price for the failure of the Freedom, Accountability, Comprehensive Care, and Transparency, or FACT Act, which sought to compel anti-abortion crisis pregnancy centers to disclose their license status and let women know that public family programs provide abortions.

Backed by abortion rights activists and overturned last year by the U.S. Supreme Court on free speech grounds, the law has generated an unintended bounty of attorney’s fees that now help underwrite conservative litigation and lawyers. Among them: the defense of the anti-abortion activist David Daleiden, who clandestinely videotaped Planned Parenthood physicians, and the legal aid group led by one of President Donald Trump’s best-known lawyers, Jay Sekulow.

Assemblyman David Chiu, the law’s author and a lawyer, noted that the FACT Act was upheld by most lower courts, including the U.S. 9th Circuit Court of Appeals, only to be reversed when the five justices appointed by Republican presidents prevailed over the four justices who are Democratic presidential appointees.

“This was constitutional until it wasn’t,” Chiu said.

Kevin Snider of the conservative Pacific Justice Institute of Sacramento countered that he and others who testified against Chiu’s bill told legislators that it would be challenged as a First Amendment violation.

“They failed to heed a warning,” Snider said, “and decided to bow down to abortion rights constituents at taxpayer expense.”

In any case, the consequences of the FACT Act are a far cry from the blue-state retort California Democrats intended in 2015 to Republican-controlled states that were limiting abortions by, for example, mandating waiting periods and counseling for women who wanted the procedure.

Chiu, a San Francisco Democrat, and his co-author, Democratic Assemblywoman Autumn Burke of Los Angeles, had — at the urging of NARAL Pro-Choice America, a national abortion rights league — taken aim at so-called “crisis pregnancy” centers. Typically staffed by religious-based abortion opponents, the centers advertise to women searching for information on unwanted pregnancies and abortion, but then seek to steer them into carrying their pregnancies to term by, for example, insisting they view ultrasound images of their fetuses.

Chiu wanted to compel unlicensed crisis pregnancy centers to post signs making clear they provided no medical care. Centers with medical licenses, meanwhile, were to be required to post signs that read:

“California has public programs that provide immediate free or low-cost access to comprehensive family planning services (including all FDA-approved methods of contraception), prenatal care, and abortion for eligible women.”

Lawmakers knew the bill raised First Amendment issues. Government cannot pass laws that infringe on speech. Nor can government compel speech, though there are exceptions, as the Assembly Judiciary Committee staff made clear in its analysis.

“It is well-settled law,” the committee staffers wrote in 2015, “that the government is ‘free to prevent the dissemination of commercial speech that is false, deceptive, or misleading’ without violating the First Amendment.”

Opponents included the National Institute of Family & Life Advocates, a Virginia organization that “exists to protect life-affirming pregnancy centers that empower abortion-vulnerable women and families to choose life for their unborn children.”

“Forcing speech is not the solution,” NIFLA, which operates more than 100 crisis pregnancy centers in California, said in its letter against the bill.

The debate was not a new one in the country’s forever war over abortion. But the bill became a bullseye when that war turned especially hot in the summer of 2015.

Daleiden, a young anti-abortion activist from the college town of Davis, had lied to gain entry to abortion conferences and surreptitiously videotaped conversations which he then edited and released, saying the tapes depicted Planned Parenthood selling fetal “body parts.” They didn’t. But Daleiden’s tapes became fodder for presidential debates, congressional inquiry, and, ultimately, part of Republican lawmakers’ talking points in Sacramento as they tried to derail Chiu’s legislation.

“Now, we’re finding out that maybe a strong motivation for abortion is not to help someone in need, … but it is maybe to harvest. Maybe there has been a huge conflict of interest and the nation is waking up to it,” Sen. John Moorlach, an Orange County Republican, said in his Senate floor speech opposing the legislation.

Sen. Richard Pan, a Sacramento Democrat and a pediatrician, responded by pointing out that the sale of fetal tissue is illegal: “If someone is doing that, they should be prosecuted.”

The bill passed on a party line vote and was signed into law by Gov. Jerry Brown.

Lawyers representing crisis pregnancy centers quickly sued. The state won in most lower courts and on appeal.

But in a 5-4 decision authored by Justice Clarence Thomas, the high court in June 2018 sided with the religious organizations, concluding in National Institute of Family and Life Advocates vs. Attorney General Xavier Becerra that the state could not compel them to post signs that violated their religious beliefs.

The decision reverberated beyond crisis pregnancy centers. Democrats who had been pushing to ban so-called gay conversion therapy abandoned the effort, seeing little chance that the legislation would withstand a legal challenge, given the precedent established in NIFLA v. Becerra.

The decision also had dollar signs attached to it.

Under longstanding federal law, the victors in suits to enforce basic rights such as free speech are entitled to attorneys fees. Court documents, most of which were obtained by the San Francisco-based First Amendment Coalition, a government accountability nonprofit, and shared with CalMatters, show that the 2018 decision resulted in a gusher for the advocates who challenged Chiu’s law.

Some $2.03 million was spread among five conservative organizations:

  • Alliance Defending Freedom of Arizona, $958,535. Its lawyers were among the lead counsel in the NIFLA case. Lately, the alliance has been defending a Trump administration rule that would open the way for federal grants to religious-based groups that refuse to help gay and lesbian couples adopt.
  • Liberty Counsel of Florida, $399,999. The legal aid group also is defending Trump’s new adoption rule.
  • American Center for Law & Justice of Washington, DC., $247,748. It fashions itself as a conservative version of of the American Civil Liberties Union. Its chief counsel, Sekulow, is a chief lawyer for President Trump.
  • Pacific Justice Institute of Sacramento, $244,475. Chief counsel Snider proudly notes that the Southern Poverty Law Center calls his organization a “anti-LGBT hate group.” As Snider sees it, he defends religious organizations whose teachings are at odds with gay rights.
  • The Scharpen Foundation of Riverside County, $172,613. Founder Scott Scharpen is a board member of Alliance Defending Freedom, and his foundation sued the state over the law. It operates Go Mobile for Life, a traveling center based in a van in Riverside County that offers “limited” ultrasound and “abortion facts — procedures, emotional, mental, spiritual, & physical risks.” Go Mobile for Life says its “unwavering goal” is that women carry their pregnancies to term.

Daleiden, now 30, also appears to be among the beneficiaries of the decision. He has spent much of the past two months in the San Francisco courtroom of U.S. District Judge William Orrick, surrounded by a legal team of no fewer than 16 lawyers and paralegals, all working free of charge, as lawyers representing Planned Parenthood press their suit alleging that he illegally video-taped physicians for the nonprofit, which supports reproductive rights.

Lawyers representing Daleiden and his co-defendants come from three of the organizations that received payments as a result of the litigation over Chiu’s bill — the Alliance Defending Freedom, Liberty Counsel and the American Center for Law & Justice.

Daleiden and his co-defendant, Sandra Merritt, also face criminal charges brought by Becerra, and are represented by many of the same attorneys. Among their defense arguments is that they were citizen journalists working undercover to expose what they saw as crimes.

Payments of attorneys’ fees are a regular part of the court system. The state often collects fees when it prevails.

Despite the millions paid to abortion opponents in the settlement struck earlier this year by deputies to Becerra, Chiu believes the FACT Act was “a fight worth having.”

“Access to reproductive health care is under attack,” Chiu said. “These fake health centers threaten the health of women. We shouldn’t put a price on that.”

This story was made possible with information obtained by The First Amendment Coalition, a San Francisco-based nonprofit focused on government transparency and accountability. The coalition, which was not involved in the NIFLA case or litigation, regularly uses the California Public Records Act to keep the public informed the actions of government agencies.

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MOORLACH UPDATE — Scary Departures — October 31, 2019

Leaving California

Yesterday, a friend shared the story of a recent road trip visiting several of the states with no personal income tax.   He and his wife had visited Park City, Utah, Jackson Hole, Wyoming and a few other places. I seem to have a conversation like this on a weekly basis.  It’s anecdotal, but it shows the scary story of the migration of many people who are leaving California. People are voting with their feet. The Daily Caller addresses this concern in the piece below.  So, let’s review a number of the frightening reasons.

This month, Joshua Rauh and Ryan J. Shyu authored a paper titled, “Behavioral Responses to State Income Taxation of High Earners:  Evidence from California.” Joshua Rauh is a Professor of Finance at the Stanford Graduate School of Business, a Senior Fellow at the Hoover Institution and a Research Associate at the National Bureau of Economic Research, for which he co-wrote the report.  He has also addressed Public Pension Liabilities, something that you know scares me,  for Prager University (see https://youtu.be/Vdmk-wCqDlE).  Ryan J. Shyu is affiliated with the Stanford Graduate School of Business.

What did they discover?

First, over and above baseline rates of taxpayer departure from California, an additional 0.8% of the California residential tax filing base whose 2012 income would have been in the new top tax bracket moved out from full-year residency of California in 2013, mostly to states with zero income tax. 

Second, among top-bracket California taxpayers, outward migration and behavioral responses by stayers together eroded 45.2% of the windfall tax revenues from the reform.

The first observation is just a small crack in the dike, since an out-migration by less than 1 percent of the state’s top 1 percent is not alarming, but, it could be the start of a trend.

With the Federal Tax Cuts and Jobs Act of 2017, the ability to deduct state and local taxes (SALT) has literally become a Halloween trick.  Income tax rates may have been lowered, but limiting SALT deductions to $10,000 has an impact on the residents of states with high income tax rates.  Californians paying the top state personal income tax rate of 13.3% are probably paying a marginal tax rate closer to 23% just for this state, which is why one member in the 1 percent club was recently spooked out of California and moved to Florida (see MOORLACH UPDATE — Millionaires and Billionaires — July 17, 2018).

The Proposition 30 income tax increase in 2012 resulted in additional tax revenues being about half of what its proponents had anticipated.  Now that is a serious crack in the dike. How much more damage has Proposition 55 in 2016, extending the personal income tax increase, caused?  Tax increases are not static. Taxpayers change their behaviors. When Connecticut increased its tax rate on its 100 top taxpayers, their overall taxes decreased by 50% the next year (2016)!  While that is scary, it’s predictable.

The Yelp Economic Average released recently showed that national growth is up 0.07 percent.  Not bad, considering the bantering with China. However, California’s major cities are experiencing declines in strength.  Of the 50 Golden State cities Yelp covers, Bay Area metropolises like San Jose and San Francisco are eerily ranked 50th and 49th, respectively, while San Diego is in 46th place and Los Angeles is in 42nd.  The Capital City is in 34th place.

Other states see the cracks in California’s dike.  And why not? Can you imagine a state so focused on electrifying everything, expending incredible sums on renewable energy sources, when hydro and nuclear are available but excluded from the calculation formulas, and not taking the time to upgrade infrastructure to transport the electricity?  In the zeal to address climate change, California has created more greenhouse gases than it has reduced thanks to electrical lines being a causation of terrifying wildfires. That’s what Sacramento mandates that are not well thought out, combined with poor long-term planning, will do.

On blue states being mismanaged, if you’re not scared enough, check out MOORLACH UPDATE — California’s and Group 7’s Fiscal Health — September 30, 2019.  The bottom 10 states, on a per capita basis of their unrestricted net deficits, are blue states, with one exception, Kentucky.  Kentucky turned red the same night Donald Trump was elected President of the U.S., after 95 years of control by the Democratic Party.  Its Republican legislature has its work cut out for them in repairing Kentucky’s massive dike leaks.

Sen. Jeff Stone (R – Temecula)

Tomorrow will be Senator Jeff Stone’s last day in the California Senate.  He has been appointed to serve in the Trump Administration as the Western Regional Director for the United States Department of Labor.  Sen. Stone is my seatmate on the Senate Floor. He and I are about the same age and we are both products of the Anaheim Union High School District, attending two of its high schools at about the same time.  He was also a Riverside County Supervisor when I served as an Orange County Supervisor.

As a successful pharmacist, investor and community leader, he has made a significant impact in the city of Temecula, the county of Riverside and the state of California.  I will miss him greatly. I wish him all the best in his new challenges as he continues to serve his state and our nation.

25th Anniversary Look Back

Speaking of scary stories, the leaks in Orange County’s dike started to grow larger.  The November 2, 1994 edition of The Bond Buyer had this front page story:  “Orange County, Calif., Authority Weighs Reallocating Pool Funds,” by Brad Altman.

Mr. Citron’s biggest supporter during the campaign was Stan Oftelie, the CEO of the Orange County Transportation Authority (OCTA).  And why not? OCTA was the largest depositor in the Orange County Investment Pool. So, when the news about repositioning surfaced, it was a very big deal.

The two things that make the topic of this article spooky is the massive effort to emphasize reaching for a higher yield, versus assuring safety of principal and liquidity; and that exiting was probably the recommended and appropriate course of action.  But I’m sure that the CEO of OCTA took this recommendation off of the table due to his very public conflict of interest.

Here are a few selected paragraphs:

The Orange County Transportation Authority has asked its underwriting team to find ways to improve returns on the nearly $1 billion the authority has invested in the Orange County pooled investment fund.

The underwriting team, headed by Lehman Brothers, was chosen last week for a three-year contract, James Kenan, director of finance and administration for the authority, said Monday.

The immediate focus will be on boosting returns on the money in the county pooled investment fund, administered by the treasurer of Orange County.

“Because of some of the strategies in place, the yield [in the pooled investment fund] has been going down,” Kenan said.  “It is about 6.7%, but we have to look at whether or not it is in our best interest, working closely with the county treasurer’s office, to possibly take some of that money out of the county pool.”

Kenan said the underwriting team will be asked to discuss “some type of a diversification program [in which] we could get involved in some other investments that  might guarantee us something in the neighborhood of 7% to 7 1/2% over the next two or three years.”

Matthew R. Raabe, Orange County’s assistant treasurer, said yesterday that the county pooled investment fund contains $7.5 billion in assets and last month returned 6.75%.

Authority officials “are asking their financing team to identify what part of the fund might be more suitable for longer-term investments, as opposed to short-term investments,” Raabe said.  He said that his office would “work with them” to explore options.

The next day, with the General Election hours away, I FAXed this article to Donn Hallman, campaign manager for Huntington Beach City Councilman Jim Silva’s run for Orange County’s 2nd Supervisorial District.  Since Jim would be successful and seated in two months and I supported his candidacy, I needed to warn him of what was impending on the horizon.

Under the subject of “Pool’s Walls Are Starting to Crack,” I provided a simple picture.  If the Pool’s assets were $22 billion and the debt is $14 billion, then the equity should be $8 billion.  If the fair market value of those assets is down to $18 billion, then the equity is actually $4 billion. Consequently, OCTA should not get its investment back in full.

Here’s what I wrote:

OCTA should get back proportion share of fair market value (FMV), or “marking to market” at net asset value (NAV), or they get a generous premium at other investors’ expense.  Jim has got to understand this and get in front of the ball before it rolls over him and the County.

I also sent a FAX to Jim Silva.

Jim,

Best wishes for a successful campaign!

Attached are two articles I’ve written.  Please read, especially if you win.

Citron’s Pool is tenuous, at best, with a major crash imminent.  I hope the text I’ve written prepares you.

Yours,

John Moorlach

For the previous LOOK BACK, see MOORLACH UPDATE — Stronger Mental Health Resources — October 26, 2019.

OPINION

JACKSON: It’s No Surprise Republicans Are Leaving Liberals To Fester In High-Cost California

KERRY JACKSONPACIFIC RESEARCH INSTITUTE

https://dailycaller.com/2019/10/29/jackson-republicans-california/

It was a New York governor, not one in California, who said conservatives weren’t welcome in the state. But apparently conservatives out here are getting the message. A recent poll found that 46 percent of those who consider themselves “very conservative” have considered leaving California.

Overall, the “high cost of housing is most commonly cited reason for wanting to leave the state” at 71 percent. But the Berkeley IGS Poll also found that “high taxes” (58 percent) and the “state’s political culture” (46 percent) are reasons some are looking to flee.

Those results are largely driven by an unbalanced response. Break down the poll’s findings by political party and ideology, and the cracks really start to show.

For instance, 77 percent of Republicans say high taxes are reason to leave while only 36 percent of Democrats feel that way. Sixty percent of those in the “no party preference/other” category cited high taxes. For Republicans, high taxes are a greater reason, by 14 percentage points, to leave than steep housing costs.

More than three-fourths (76 percent) of those identified as “very conservative” said high taxes were the top reason to consider leaving, as did 76 percent in the “conservative” group. “Very liberal” and “somewhat liberal” logged in at 20 percent and 38 percent respectively.

Meanwhile, the split over the state’s political culture is an unbridgeable width-of-the-universe chasm: 85 percent of Republicans said it’s why they’re thinking about quitting, but only 11 percent Democrats listed it as motivation. The gap between the “very conservative” and the “very liberal” is even wider, 84 percent to 3 percent.

It’s not always been this way. Just six years ago, California Republicans and conservatives felt better about their state, with 29 percent of Republicans saying it was “one of the best places to live” and 31 percent of the “very conservative” holding the same opinion. This year, only 23 percent of Republicans and 19 percent of the “very conservative” believe that. Over that same period, both Democrats and the “very liberal” moved in the opposite direction, with more believing California is “one of the best places to live” in 2019 than 2013.

In addition to high taxes, what could possibly bother California Republicans and conservatives so much that they dream of fleeing? Why does state GOP Sen. John Moorlach of Orange County feel, anecdotally, “like I have someone new telling me that they are thinking about moving to another state on a weekly basis”?

The search for answers should start with the fact that California continues to move from being a civil society to a political society, in which government coercion is the organizing principle.

Think of how Sacramento and local governments have recently invaded private matters: bans on plastic bags, straws, and utensils, as well as natural gas; the road diet; proposals to strip consumers of the right to buy gasoline-powered automobiles; outrageous motor fuel taxes; and a determined campaign to install a single-payer health care regime.

California has a habit of addressing issues that aren’t problems. Banning plastic consumer items, forcing commuters into mass transit, and outlawing fossil fuels might make activists, lawmakers, and voters in the wealthy coastal enclaves feel good, but the intrusions are burdensome and frustrating for the rest.

Political capital and legislative resources are burned up solving superficial and imagined problems, leaving too few available to adequately deal with real issues, such as runaway public employee pensions, the housing and homeless crises, a hostility toward businesses, a middle-class exodus, declining public schools, and a creaky — and unnecessarily punitive — income tax system.

“When,” asks Moorlach, “will the Democrats begin to understand that they are mismanaging blue states, especially California?”

While elected Democrats, progressive activists, Silicon Valley executives, and Hollywood celebrities worship the concept of “diversity,” they reject diversity of political opinion. Would it hurt for them to occasionally show some respect for, and maybe even consider, ideas that don’t increase government’s role rather than summarily dismiss them as bigoted or sexist?

None of this means Republicans and conservatives are officially unwelcome in California. Though that might be some politicians’ objective, they can’t risk publicly alienating the middle.

But those who don’t run for office need not be so guarded. When tech media CEO Peter Leyden and Ruy Teixeira from the left-wing Center for American Progress wrote last year’s “The Great Lesson of California in America’s New Civil War,” they spoke for many on the left in calling for the establishment of a one-party political system in which dissenting thought is shut out.

No, it’s no mystery why Republicans and conservatives want to escape California. The reasons couldn’t be more obvious.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute, a nonprofit group advocating for limited government.

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MOORLACH UPDATE — Stronger Mental Health Resources — October 26, 2019

Mental Health Forum

This morning we enjoyed a robust discussion today at Vanguard University of Southern California on the subject of the Lanterman-Petris-Short Act (see MOORLACH UPDATE — Lanterman-Petris-Short Act — August 17, 2019). We also covered SB 640 (see MOORLACH UPDATE — Senate Bills 511, 584, 598, 496 and 640 — April 15, 2019).

My thanks go to Heather Huszti, Ph.D. with CHOC, Commander Joseph Balicki with the Orange County Sheriff’s Department, Jeffrey A. Nagel, Ph.D., Behavioral Director for the County of Orange, Marshal Moncrief, MFT, MBA, CEO of Mind OC, Matt Holzmann, Chair of Public Relations for the Orange County affiliate of the National Alliance on Mental Illness (NAMI), and Dr. Sina M. Safahieh, Program Director of ASPIRE at Hoag Memorial Presbyterian Hospital. Thanks also go to Dr. Drew Pinsky, who provided an excellent video introduction to the discussion (see https://youtu.be/JJjp24dyDKU).

Gun Shows

Providing proper treatment and medication for those enduring severe mental illness is critical. Keeping them on their medication is a must. For a thorough discussion of this claim, I would recommend that you read The Center Cannot Hold: My Journey Through Madness, by Elyn R. Sacks.

Felons and those with severe mental illness could also be prohibited from possessing firearms (as allowed by District of Columbia v. Heller [2008], which otherwise protected an individual’s Second Amendment right to keep and bear arms).

Most individuals who are severely mentally ill are not a danger to society. But, untreated schizophrenic delusions can generate some tragic results. Another industry expert, DJ Jaffe, shares a similar view in his book, Insane Consequences: How the Mental Health Industry Fails the Mentally Ill, pages 25 to 28.

Adults with untreated serious mental illness can cause devastating consequences for the public, police, and the ill individuals and their families.

Mentally ill Aaron Alexis was not in treatment when he shot and killed twelve people in the Washington, DC, Navy Yard.

Mentally ill Seung-Hui Cho was not in treatment when he killed thirty-two and wounded seventeen at Virginia Tech.

Mentally ill Jared Loughner was not in treatment when he killed six and wounded US Representative Gabrielle Giffords.

Mentally ill James Holmes was not in treatment when he shot and killed twelve in an Aurora, Colorado, theater.

Mentally ill John Hinckley was not in treatment when he shot President Reagan.

Mentally ill Shannon J. Miles was not in treatment when he shot and killed Harris County Deputy Sheriff Darren Goforth at a Chevron station north of Houston.

Mentally ill Ismaalyl Brinsley was not in treatment when he ambushed and killed two police officers sitting in their patrol car in Brooklyn, New York.

Mentally ill John Zawahri wasn’t known to be in treatment when he killed five and wounded more in a mass shooting at Santa Monica College.

When I explained to the reporter that I would like to address a causation of the misuse of firearms, you can understand why. The Daily Pilot synthesized a long interview into one brief sentence in the piece below. I thought the above might help you in understanding this one glib observation.

25th Anniversary Look Back

Interest rates continued to rise and I was monitoring Mr. Citron’s portfolio by paying to receive a copy every month. The investment acquisitions he was making indicated he was still under the impression that the Federal Open Market Committee and its Chair, Alan Greenspan, had discontinued to raise (tighten) interest rates.

I became very worried.

On October 31, 1994, I sent out individual, but identical, correspondences to four of the bond market experts that anonymously helped me during my campaign. Since it is 25 years ago, here are their names and employers at the time:

Alan Crowne, Oppenheimer & Co., Inc. (RIP)

John A. Baer, Liberty Capital Markets

Steve Faeth, Great Pacific Securities

Ronald D. Struck, Cruttenden & Company

There were others individuals that also assisted. But, these four provided information to me independent of the others. And, their research and analyses matched. They also were not aware of the other professionals who jumped in and volunteered to review the Orange County Investment Pool. But, they all saw the same things I did and corroborated my concerns.

They did not wish to be identified, as broker dealers do not want to see their employees mentioned in the media. And, if they were seen as assisting a candidate running against an elected incumbent County Treasurer, they would surely be cut off from doing business in this market niche. These professionals are heroes to me and I am now providing their identities to show my deep appreciation for their sacrifice of time and potential employment (if they had been identified).

Robert Citron went after any broker that would bad mouth his portfolio, going directly to the top of the organization to rattle cages. Just ask Mark Robles, now with Alta Pacific Wealth Management, about the letter Mr. Citron wrote to Robles’ former employer, AG Edwards, addressed to Mr. Edwards himself in St. Louis. That’s how dark this whole scenario was. So, John, Steve, Ronald and Mark, thanks for risking and for being right.

Here’s my correspondence:

Even though my campaign technically ended on June 7th, it still goes on. The Orange County Register still “doesn’t get it,” which is proven by their follow up articles. One saying the sky didn’t fall for Citron and the latest that he erred on the direction of interest rates. Since you and I know what really is going on, the articles are cause for nervous laughter.

Needless to say, my crusade is not finished yet. I have been obtaining the monthly MoneyMax reports from Citron’s office (September’s has been requested). Enclosed is a copy of my summarization of the Pool and a copy of the August Pool balances.

Citron is still deeply in debt, with his borrowing costs increasing daily. He still believes that interest rates will decrease in the long-term and has been buying five- and ten-year bonds to prove it. And his derivatives have remained stagnant with no new acquisitions or retirements (as if we expected any).

I want to thank you, again, for the great help you were to me during the campaign. I would venture to guess that the fair market value is down by over $3 billion, now. Should Orange County resemble the recent debacle in Cuyahoga County, Ohio, I may be in contact. I will try to continue bringing a business-minded solution to salvaging our County’s financial investments. The enclosed should keep you up to speed, in case I call you.

If you need me to request any other materials from the Treasurer’s office, then let me know and I will request them.

Very truly yours,

John M. W. Moorlach

For the previous LOOK BACK, go to MOORLACH UPDATE — Be Well Orange County — October 17, 2019.

O.C. fairgrounds renews gun show for five events in 2020

By FAITH E. PINHO

https://www.latimes.com/socal/daily-pilot/news/story/2019-10-24/o-c-fairgrounds-renews-gun-show-for-five-events-in-2020

Orange County gun lovers can rest easy, at least for another year.

The Crossroads of the West Gun Show — which has been the subject of public debate the past two years — will hold five shows at the OC Fair & Event Center in Costa Mesa in 2020.

The Fair Board voted 5-1 on Thursday — with members Newton Pham and Barbara Bagneris absent — to renew the Fair & Event Center’s contract with the gun show, which has been held annually at the fairgrounds for 37 years.

Several board members said they were impressed by the show’s safety measures and openness to dialogue about gun rights and regulations.

“I feel safer taking my child to a gun show than I do allowing them to eat an item deep-fried at the fair,” said board member Natalie Rubalcava-Garcia. “Banning a gun show at the fairgrounds is not going to solve the safety and security issues that we have, so I think it’s irrelevant to make those one and the same.”

Board member Ashleigh Aitken voted against the contract, pointing to previous decisions by the board to ban smoking and cannabis events and sales at the fairgrounds.

“It’s just illogical and inconsistent, in my view, for us to make determinations but decide we would like to sell firearms on state-owned property when there are plenty of shops throughout Orange County and there are plenty of opportunities for people to purchase, get educated and sell back their firearms,” Aitken said.

This summer, Dave Min, a Democratic candidate for state Senate in the 37th District, called for an end to the gun show following a string of shootings in Dayton, Ohio; El Paso, Texas; and Gilroy. His Democratic opponent, Costa Mesa Mayor Katrina Foley, said at a debate Monday that she would support ending the show.

The incumbent they’re trying to unseat, Sen. John Moorlach (R-Costa Mesa), has said he would not support ending the gun show at the fairgrounds and would instead push for stronger mental health resources in the county.

For the second year in a row, the board’s vote on the gun show drew activists advocating for Crossroads of the West. Several spoke about the show’s familial atmosphere, and many said generations of families attend.

Others emphasized the show’s strong security measures and the tight state and federal regulations governing business there. No customer can leave the fairgrounds with a new gun, they said.

“We happily expose ourselves to them,” said Michelle Watson of Carol Watson’s Orange Coast Auctions. “We’re hiding nothing, and we follow everything we’re supposed to do.”

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MOORLACH UPDATE — XBRL Killed By Governor — October 21, 2019

XBRL

SB 598 was vetoed by the Governor, mind you, who purportedly wrote the book, Citizenville: How to Take the Town Square Digital and Reinvent Government and created the Office of Digital Innovation. The Bond Buyer provides the sad obituary below.

I believe that there is a chance for the Governor to see the light and revisit the issue, but for now, I mourn that he missed the easiest opportunity to advance innovation in his first year at the helm. I guess we’ll wait for other states to show us the way. Then he may just propose implementing XBRL in the future and claim the idea as his own.

For a sampling of previous UPDATEs on this bill, see the following:

ADA 

The October 8th edition of the LA Times had the following headline above the fold of its Business section:  “Justices let blind sue over access to websites–Supreme Court won’t block a case brought by a man who found Domino’s Pizza online site unusable.”

If you would like to learn how to make your website ADA (Americans with Disabilities Act) compliant, we have a short seminar for you.

It will be held next Wednesday, October 30, 2019, from 10 a.m. noon at the Tustin Community Center at the Market Place, 2961 El Camino Real, Tustin.

The seminar is co-hosted by my office and the Civil Justice Association of California.  The details are on my website, see https://moorlach.cssrc.us/content/small-business-forum-ada-compliance.

AM 790 KABC

Dr. Drew Pinsky of AM 790 is promoting our upcoming forum on mental health, see:

http://www.kabc.com/news/senator-john-moorlach-invites-you-to-a-mental-health-community-forum/

The Forum is this Saturday, October 26th, at Vanguard University in Costa Mesa, from 9 a.m. to 11 a.m.   You’ll learn about the problems with the Lanterman–Petris–Short Act of 1967 and solutions for our community’s mental health problems.

Register by clicking on Reserve My Seat.

XBRL study bill dies at hands of California governor

By Keeley Webster

California Gov. Gavin Newsom vetoed a bill that would have set up a commission to study whether to require state and local governments and agencies to provide financial documents to the state controller’s office in a more readily searchable format than the PDF.

Newsom’s veto of Senate Bill 598 posted Oct. 12 along with a flurry of other veto-pen victims just a day before his final signing deadline for the session.

California state Sen. John Moorlach, R-Cosa Mesa, in a hallway at the State Capitol in Sacramento.

“The veto just really caught us off guard,” said state Sen. John Moorlach, sponsor of the bill that cleared both houses unanimously.

The Open Financial Statements Act would have established a commission to study requiring governments to use eXtensible Business Reporting Language, a standard machine-readable format for financial reports.

The bill was modified in committee to establish an Open Financial Statement Commission within the State Treasurer’s Office to study adoption of XBRL and report its findings to the Legislature. In its original form, the bill would have moved straight to implementation.

“Although improving public agencies’ financial reporting processes for transparency is vital, this bill imposes additional unbudgeted costs for the state and contains implementation provisions that are problematic,” Newsom wrote in his veto message.

The governor’s office didn’t respond to a request for insight as to the extent of the additional costs or which implementation provisions the governor found objectionable.

The bill sailed through the Assembly and Senate with no opposition.

State Treasurer Fiona Ma supported the bill, writing in a letter that XBRL has been adopted by the Securities and Exchange Commission for corporations. It would help local governments, private analysts and the public “better track taxpayer dollars by switching to a system that is more accessible, efficient, and user-friendly,” Ma wrote.

Marc Joffe, a senior policy analyst with the Reason Foundation, who worked with bill sponsor Sen. John Moorlach, R-Costa Mesa, on the legislation, said “nothing is absolutely free,” but the cost to study implementing XBRL was de minimis. Even in the original version of the bill that included the cost to implement the bill, he said, the estimated cost was around $1 million.

It might have been a case of poor timing, Joffe said, because the Legislature approved the bill after the budget, so perhaps the governor didn’t want to approve anything that added additional costs after that juncture.

“What the bill does is just set up a commission and Treasurer Fiona Ma was willing to take it on and underwrite the cost of the committee in her budget,” Moorlach said. “There might be a cost if you implement it, but the standard isn’t expensive and the technology is being used by the SEC, so I’m trying to figure out where the cost is there.”

Moorlach said he was surprised that the tech-friendly governor, who penned “Citizenville: How to Take the Town Square Digital and Reinvent Government,” would be opposed to studying the adoption of XBRL.

“He put $40 million in the budget to deal with digital innovations,” Moorlach said. “This would have run parallel to what he was trying to do. The veto just really caught us off guard.”

Moorlach compiles a report annually that culls information from the audited statements of the state’s 940 school districts to determine the extent of their long-term liabilities including pensions. “With XBRL, instead of spending months accumulating that data, we could do it in seconds,” he said.

Moorlach hasn’t met with staff about his plans for next year yet, so he couldn’t say one way or another whether he will reintroduce the bill in January.

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